John Keells Foods to tie up with Thai company

Reports from Bangkok say that a distribution line and collaboration to build factory in pipeline

John Keells Foods is to tie up with a Thai sausage making company in the near future as the latter looks at a US$ 4.3 million expansion programme.

The Bangkok Post reported that S. Khonkaen Foods Plc, the leading producer of Thai-style sausage and dried shredded pork, plans expansion both globally and domestically with an investment budget of 80-130 million baht (about US$ 4.3 million).  

On its plans abroad, CEO Charoen Rujirasopon had told the Bangkok Port the latest move was the signing of a Memorandum of Understanding with a giant of Sri Lanka’s food business, Keells Food Products Plc, a subsidiary of John Keells Holdings. The deal takes the form of a distribution agreement and joint venture.

Keells Food Products owns the Keells supermarket chain, a likely distribution channel for S. Khonkaen products. Both sides also entered a collaboration to build a factory in Sri Lanka to produce Indian-style foods. A study will determine the size of the potential market for both companies to export to India.

In addition, S. Khonkaen will expand production in Poland, where it is hiring a factory to produce Chinese pork sausage, sour pork and moo yor (a Thai mortadella) to supply Eastern European markets.

The company has opened three branches of Sab Express outlets in department-store food courts in Thailand, offering dishes like papaya salad and grilled chicken.

It plans to have 10 branches next year and will use the model as a prototype for Thai fast-food expansion in Europe, with its first location planned for Warsaw, Poland.

As for domestic investment, S. Khonkaen will invest in enhancing machinery and cold storage at Mahachai in Samut Sakhon and Bang Phli in Samut Prakan. The company’s current production capacity is 10,000 tonnes a year, which is expected to rise 10-15% with the new machinery.

A new project concerns a pesticide-free vegetable farm in the Pak Chong District of Nakhon Ratchasima, where S. Khonkaen plans to grow produce such as chillies and papayas.

Charoen said the group was aiming at 10% growth in revenue to 1.8 billion baht this year. Growth next year is pegged at 15% through aggressive expansion of domestic markets.

Next year will see the launch of ready-to-eat Thai desserts and chilled foods under the Aroi Dee brand, which will be priced around 25 baht each to capture the mass market.

S. Khonkaen shares closed yesterday on the Stock Exchange of Thailand at 70 baht, down one baht, in trade worth 127,000 baht.