May 21, 2012
Charoen Pokphand Foods joint ventures with South Korea's E-Mart
As part of a five-year plan to achieve targeted export value of THB10 billion (US$319.7 million) and in a bid to boost chicken exports, Charoen Pokphand Foods (CPF) has formed a business partnership with E-Mart, the largest discount store chain in South Korea.
One of the key business models for CPF's long-term growth, the company is considering developing such business models with other trading partners here and overseas. In addition, the strategy will also encourage the company and its partners to achieve sustainable growth by directly serving market needs.
The partnership with E-Mart is a pilot project of CPF to forge similar partnerships overseas and raise export value from THB1 billion (US$32 million) now to THB10 billion (US$319.7 million) by 2017.
Under the strategy, the first shipment will be exported next month, the results of which will be evident by the end of this year.
Pisit Ohmpornnuwat, executive vice president of CPF, said E-Mart had broached on this idea, which also matched CPF's business strategy that it had already implemented with its local trading partners. In addition, E-Mart offers more business opportunity to distribute ready-to-eat products and the company's frozen food category.
"It is a good business matching with CPF producing a variety of products while E-Mart is efficient in distribution and has market channels there," said Pisit. He added that all CPF product exports under the contract would be under the CP brand. CPF is also planning to launch a similar business model with trading partners in other countries.
CPF is going forward with its brand-building in the international market by accessing more retail and wholesale segment through the "CP brand". So far, the company has been one of the main suppliers of chicken products to Cosco in the US, Woolworths and Cold in Australia, Carrefour and Auchan in France and E-Mart and Key Account in South Korea.
Pisit said such an expansion model would also serve the company's plan to change its processing line from original equipment manufacturing at more than 80% and the remainder production under the "CP" brand. In addition, its total production has been distributed through three channels - industrial production 60%, food service 30% and the rest through retail.
"In our five-year plan, we have to focus more on ready meals to cope with consumption trend," said Pisit.
Pisit pointed out that chicken and shrimp export revenue now accounts for 20% of the company's estimated sales of THB300 billion (US$9.6 billion). However, it has drawn up a plan to achieve THB100 billion (US$3.2 billion) export value in the next five year.
To boost exports, the company has invested THB1.2 billion (US$38 million) to expand its existing shrimp wanton manufacturing plant in Rayong to serve rising market demand. Its shrimp export volume is projected to increase from 53,000 tonnes to 70,000 tonnes this year, making it the world's biggest shrimp exporter as well Thailand's biggest supplier.