April 12, 2011
 

Marfrig's Keystone establishes joint ventures in China

São Paulo, Brazil-based Marfrig Alimentos S.A. formally declared that it will establish two joint ventures in China via its Keystone Foods unit, a supply and distribution venture, and a vertically integrated poultry operation. 

COFCO Keystone Foods Supply Chain (China) Investment Company will be a joint venture owned 45% by Keystone and 55% by COFCO and will explore business opportunities in food logistics and distribution services in China.

The joint venture will combine the local market knowledge of COFCO with the experience of Marfrig and Keystone Foods in food distribution and in developing international clients to create a multi-temperature logistics company in China.

The project, to start operations in 2012, would include constructing six distribution centers, transportation fleets and information-support technological platforms in strategic cities, including Beijing, Shenzhen, Chengdu, Shanghai, Shenyang and Wuhan.

The total investment in the JV is estimated at US$252 million over 10 years. The agreement is expected to be signed on April 15.

A second joint venture, Keystone-Chinwhiz Poultry Vertical Integration, would be owned 60% by Keystone and 40% by Chinwhiz and would include vertically integrated poultry operations in China.

The JV would initially have capacity to process 200,000 birds per day and would be capable of supplying 50% of the raw material needs of Keystone's processing unit in China. The unit already serves over 2,600 restaurants in China, Hong Kong and Japan.

The project would combine Keystone's expertise in managing vertically integrated operations with Chinwhiz experience in the local agricultural industry to integrate food safety and social responsibility into the system.

The investment in the JV is estimated at US$57 million by the end of 2013. The agreement is expected to be signed on April 17.

Keystone Foods established a presence in China in 1990, supplying processed meat products to restaurants in Hong Kong, China and Japan. Today it produces over 35,000 tonnes of chicken products per year in China, but does not hold any assets in the country's vertically integrated chain. In October 2010, Keystone became an integral division of the Marfrig Group.