May 4, 2007

CPF to look at processed products and foreign markets for the next decade
 

Following the trend set by US chicken producer Tyson, Thailand's Charoen Pokphand Foods (CPF) said it would cut down reliance on raw products and focus more on processed products and branding, Thailand's newspaper The Nation reported.

The company's new 10-year plan, unveiled this week, would reduce the company's exposure to the risks inherent in commodity goods and expand its export and retail operations.

President and CEO Adirek Sripratak said the company's experience over the past 10 years from which it suffered from the unpredictability of the commodity market, formed the basis for the policy change.

He said he intends to take the company on a path of research and development and international acquisitions.

The company's planned expansion into retail under the CP brand would encourage the rapid achievement of brand loyalty. To support its retail distribution, the company may embark on a drive to expand its distribution and logistics networks, Adirek said.

The company said it would commit an average of THB 4 billion (US$122 million) to THB 5 billion (US$152.7 million) a year over the next 10 years to its export and retail wing.

However, CPF plans first to balance the revenues received from raw commodities such as chicken, pork and fish from breeders with that of finished products.

At present, revenues from raw commodities account for 30 percent of its domestic sales whereas processed products account for only 5-10 percent.

After weathering the financial crisis in 1997, the company learned the importance of focusing on its core business, brand-building and investing abroad. The strategy has made the company one of the top food production and export companies in the country. 

The domestic market formed 70 percent of the THB 125 billion (US$3.8 billion) in sales the company made last year. The company aims to have a 50:50 balance between domestic and foreign revenues in the next five years.