S Khonkaen eyes joint venture in the US
S KHONKAEN Foods, a major producer of traditional Thai foods, is negotiating the setting up of a joint venture in Los Angeles with a top trading firm that has a strong distribution network in the United States.
The Thai company will also have its seafood-products subsidiary listed on the Market for Alternative Investment by November, so there is a flagship entity when it comes to penetrating international markets.
Chief executive officer Charoen Rujirasopon said the negotiations with the US-based trading firm, which is owned by a Thai national, were nearly complete. If the talks are successful, the joint venture should be set up by the end of this year to look after the distribution of S Khonkaen’s products, including snacks and chilled food, in the US, Canada and Mexico.
“We will appoint a local manufacturer in the US to produce products via an OEM [original equipment manufacturing] contract, so we can control all product formulas. However, in the long term, we plan to build our own production facilities in the US once we have high sales volume or worth about Bt100 million per year,” Charoen said.
He added that the joint venture would be set up in line with S Khonkaen’s vision to become a leading manufacturer and distributor of Thai foods in the world market by 2020.
The company set up S Khonkaen Foods (Netherlands) three years ago to oversee the European market and has appointed a sole agent for the Australian market. This year, S Khonkaen will appoint another agent to look after the Middle East market, he said.
“Our aim is to boost the contribution from international markets from 8 per cent to about 30 per cent by 2020,” he said.
Charoen added that S Khonkaen expected its annual sales revenue to hit Bt6 billion by 2020, of which about 30 per cent would come from export. Over this period, the company also hopes for 15-per-cent organic growth, while the rest will be driven by its joint-venture possibilities for snack and seafood businesses in the US, mainland China, Hong Kong and Japan.
S Khonkaen posted Bt2.4 billion in sales revenue last year, up 11 per cent over 2014. The company targets 15-per -cent growth in sales revenue this year, and grew by 11-12 per cent year on year in the first quarter.
The current contribution from exports stands at 8 per cent. The company has been exporting goods to some 20 different markets, including chilled seafood to the US and Europe, and meat-based products such as pork sausage and shredded pork to Hong Kong and mainland China.