October 1, 2007

 

Thai pork company hires Polish processor to access EU market

 

 

S. Khonkaen Food Industry Plc, a major producer of Thai-style sausages and dried, shredded pork, has announced plans to use a Polish processing plant as a springboard to access the EU market, the Bangkok Post reports.

 

CEO Charoen Rujirasopon noted that the EU's strict food safety and sanitary standards pose a challenge to the company. The EU has barred Thai meat due to foot-and-mouth disease concerns. The move would also help the company reduce foreign-exchange risk, he said.

 

The Thai company has contracted Paruzel of Poland, the country's leading food processor, to produce S. Khonkaen products for distribution in 16 EU markets and other countries.

 

S. Khonkaen will pay THB 10 million (US$3.13 million) to the Polish firm under an original equipment manufacturer (OEM) agreement for three years. Both firms will share marketing costs.

 

Although the products would be made at the Polish factory, the technology, quality inspection and marketing would fall under the control of S. Khonkaen, said Charoen.

 

The company expects to gain about THB 60 million (US$1.88 million) in sales from the Poland factory in the first year.

 

There is demand for Asian processed meat from the 10 million Asians living in the EU, Charoen said. However there would be keen competition from the Taiwanese and Vietnamese companies there as well, he added.

 

The company hopes the expansion would lift sales to international markets to 15 percent of revenues this year, up from 10 percent last year. This would hopefully hit 40 percent by 2010.

 

The company also planned to woo younger consumers and would introduce seafood snack products in November and ready-to-heat pork and barbecued meat in the first quarter of next year.

 

The company lowered expected sales growth of its processed pork and seafood products this year to 6 percent to THB 740 million (US$23.2 million), below the earlier 8 percent expected, due to a decline in consumption.

 

The company also plans to spend THB 30 million to 50 million (US$954,000-US$1.56 million) next year on new machinery.