Food and agriculture

US food major Cargill to invest US$50m to double cooked poultry products capacity in China

Cargill is applying insights gained from its e-commerce business to create food products that cater to Chinese tastes

PUBLISHED : Thursday, 28 December, 2017, 5:07pm
UPDATED : Thursday, 28 December, 2017, 10:29pm

Cargill will invest US$50 million to double its cooked poultry foods capacity in China, as the global agricultural trading major aims to cater to evolving tastes in the country, according to the head of its China meats business.

The company’s expanded capacity at its plant in Chuzhou in eastern Anhui province will start operations in 2019 and make mainly ready-to-eat, cooked poultry products, said Omar Sadeque, president of Cargill Animal Protein in Greater China. The plant was originally opened in 2013 and covers everything from breeding and raising to processing.

He said the world’s leading agricultural trader will mainly focus on investing in the cooked foods segment as it posts double-digit growth and complements its bigger yet slowing single-digit growth of its raw meats business.

The cooked foods business would enjoy an upper hand in five years, he said, noting it could come from new investments or acquisitions.

Cargill is trying to respond faster to changing consumer tastes in China, as its clients such as McDonald’s and KFC face a more challenging market in the country

“The potential [for growth] now has to be more driven by better meeting consumers’ changing tastes,” Sadeque told the South China Morning Post in Shanghai. “Whoever can help entice consumers with new offerings, products, experiences and emotional connections, they will have continued growth in China.”

Cargill is trying to respond faster to changing consumer tastes in China, as its clients such as McDonald’s and KFC face a more challenging market in the country.

Cargill is leveraging insights gained from its e-commerce businesses launched in 2016, calling it the “innovation lab”.

The same year Cargill opened a 12 million yuan (US$1.8 million) research and development centre in Shanghai to make products that appeal to discerning Chinese consumers.

The decision on the new investment was hastened by the success of its e-commerce business, through which it sells poultry and imported beef on major Chinese fresh food platforms directly to consumers. It is now responding to consumers’ needs by acting on the consumer feedback more rapidly by making products that cater to Chinese tastes.

Cargill has seen a much faster than expected sales growth of 300 per cent from its retail e-commerce business in the past 12 months on the back of its tie-ups with e-commerce players including, Tmall, Yiguo, Yihaodian and Fresh Fresh.

Jason Yu, general manager of market research company Kantar Worldpanel in Greater China, said fresh foods e-commerce enjoys huge growth potential in China as tech-savvy Chinese consumers are open to buying premium foods online instead of visiting a wet market.

“For food suppliers, they can join hands with e-commerce platforms in building up a supply chain with trackable foods origin to woo increasingly health-conscious consumers,” he said.