ConAgra a model of
downstream success
WALAILAK KEERATIPIPATPONG
|
Sponsoring English football clubs
could be an effective marketing tool, says Mr Adirek. |
The chief of Charoen Pokphand Foods (CPF)
has a number of ambitious plans over the next five years,
from developing the company to be more like the US giant
ConAgra Foods to sporting the CP brand on English football
jerseys.
"The business model of ConAgra has
inspired me most and I told investors so when I was asked
what I would like CPF to be in the future," says Adirek
Sripratak, CPF's president and chief executive.
The Nebraska-based ConAgra, one of the
largest packaged-food companies in the US, is engaged in the
frozen food and prepared meat industries with hundreds of
brands rather than trading in commodities and suffering
volatile prices, he said.
In order to do so, ConAgra has sold all
of its 13 production plants and begun outsourcing materials
from quality suppliers instead.
Decreasing upstream activities and
focusing efforts on brand building, distribution and new
food products are steps taken by many big food companies, he
noted.
"As the position of CPF is to be the
kitchen of the world, we will follow on this crucial path
and engage more in downstream activities," he said.
According to Mr Adirek, from now on CPF
will curb the expansion of its local operations. No huge
production plants will be built since the existing supplies
of livestock meat and aquacultural products are more than
enough.
CPF controls about 40% of the country's
nine-million-tonne feed industry, one-third of an estimated
520,000 tonnes of shrimp production and 30% of chicken
production, now at 17 million birds a week.
Its eight-billion-baht food complex will
therefore be its last big production hub. "We will outsource
products from certified contracted farms instead," said Mr
Adirek.
Over the next five years, the larger
portion of its annual investment budget, approximately 4-5
billion baht, will be shifted to foreign operations. The
local operations would stick to three highlights: offering
more food menus, strengthening brands and improving
logistics systems in major cities of each region such as
Khon Kaen, Surat Thani, Lampang, and Bangkok.
It will recruit experts in logistics
services and procured software.
The objective is to deliver food to
thousands of outlets of retail markets and food service
operators across the nation including Tesco Lotus, the KFC
restaurant chain, and CP Freshmart, the CPF-owned retail
chain.
More offshore investments would help lift
sales revenue from exports and overseas operations to half
of the total in the next five years, up from about 35% at
present. Sales income in 2112 is forecast to exceed 220
billion baht, from 137 billion in 2007 and an estimated 150
billion baht this year.
Mr Adirek is confident that there are
enormous markets for food products in foreign countries,
especially India, China, or Russia. CPF has made investments
in many countries, from primary farming to food processing.
Revenue from foreign operations accounted
for about 17%-18% of the total last year. It is expected to
rise further this year when the plant in Russia opens this
month.
To increase sales in Europe, CPF will add
one sales office each in Poland, Portugal, and Greece,
bringing the number of its sales offices to 21.
A number of food products under the CP
brand are now marketed in 40 countries after building the
brand for three or four years.
To promote CP as a global brand might
take more time and effort, he said, noting that sponsoring
English football clubs could be an effective marketing tool.
Thai Beverage (ThaiBev) has been
successful with this marketing approach for the past three
years, with its Chang beer logo on the shirts of Everton
players. Early this year, ThaiBev signed a contract to
extend the sponsorship with the Premier League team for
another three years, starting in the 2008-09 season, at a
cost of about 520 million baht.
"We will study this marketing model. It
may come true in the next five years when our sales hit 200
billion baht," he added.
CPF expects a 10% rise in sales this year
to 150 billion baht thanks to higher market prices of all
meat. Chicken prices rose last week to 44 baht a kilogramme
from 37 baht in the same period last year, while live pigs
moved up to 55 baht per kilogramme.
