February 11, 2010

TGM to launch US$30 million new meat plant

The family-run meat processor Thai-German Meat Product (TGM) is going ahead with a THB1-billion (US$30 million) investment in a new factory at Wellgrow Industrial Estate in Chachoengsao, Thailand, a project delayed for six months by political unrest last April.

Construction is due to begin late this month or next month, with operations to start by the middle of next year, said Watana Puapatanakajorn, TGM's vice-president.

The new processing facility will add 60-70 tonnes to TGM's current daily production of 20 tonnes from its first meat processing plant, which is on 5-rai in Wellgrow Industrial Estate, said Watana.

Increased production should also build up exports, which currently contribute only 10% of sales revenue, said executives. TGM exports mainly to Cambodia, Hong Kong and Singapore.

Exports, which are mainly through modern trade outlets and hotel chains, are expected to hit 15-18% of sales this year and 25-30% once the new plant becomes fully operational.

The company reported sales revenue last year of about THB1 billion, up only 10% from 2008 against an average 20% annual organic growth in recent years. Modern trade channels contribute about 55% of the company's sales, with the rest coming from channels such as hotels, restaurants and bakery shops.

TGM attributes its bearish growth mainly to political turmoil and shrinking consumption. Boosted by global and domestic economic recovery, the company expects its sales to climb by 20-30% this year. Net profit represents about 8-10% of the company's sales.

Founded in 1993 as a joint venture between Thai and German firms, TGM is one of the leading meat product manufacturers in Thailand, specialising in a broad range of Western meat products such as sausage, ham, bacon, salami and dried ham. These are sold mainly under the brands Two Pigs, TGM, Eurola and Schaefer.