Thailand's CPF meat giant is mapping out plans to set up its own distribution centre and logistics system, designed to support its expansion as well as meeting demand from rapidly growing regional trade.
"Distribution and logistics are the most powerful factors controlling business," says CPF president and CEO Adirek Sripratak, adding that the company has recruited about 10 logistics experts, including one based in Hong Kong.
The plan aimed at ensuring sustainable growth of an average 10% per year over the next five years, which will achieve Bt200 billion in annual sales revenue, Sripratak says. He adds that the brand-building strategy aims to direct the company towards global recognition and, eventually, to settle on a "one company, one logo" policy. "We plan to reduce exports of fresh meat and to focus on our brand and finished products," Sripratak says.
CPF has already achieved the "third step" in food industry development, involving a value chain beginning with breeding and animal feed, owning farms as a medium step, and making processed foods downstream.
In addition, CPF, Sripratak says, has expanded not only into neighbouring countries such as Laos, Cambodia, Vietnam, Burma, Malaysia and Indonesia, but also into other potential Asian markets like India, Turkey and Russia.
CPF has invested Bt500 million to set up an animal feed meal and pork products plant in Russia, which is expected to begin operations late next year and is also planning to expand its animal feed meal and aquaculture businesses in the Philippines.
Sripratak says the food industry had reached a turning point because grains like maize are being diverted for use in ethanol manufacturing.
Demand for maize to support the ethanol industry in the United States has increased from 10% last year to 20% this year, and major maize importers such as Japan and Vietnam are facing price increases from Bt6 per kilogram last year to Bt8 this year. In Thailand, maize prices are expected to rise by 15% this year to Bt6. 50 per kilo.
"It is forecast that the cost of producing meat will increase because the feed meal industry will face a shortage of grain and this will prompt tougher competition on the world market," Sripratak said.