Boon Rawd upping food game
New subsidiary to receive B2.5bn
Boon Rawd Brewery Co, the maker of Singha beer, looks set to splurge 5 billion baht to expand its food business globally, aiming to raise its food sales to 15 billion over the next three years.
Piti Bhirombhakdi, the company's strategic supply chain officer and director, said of the total investment scheduled for 2018-2020, 2.5 billion baht will be allocated to the new food subsidiary, called Food Factors Co, which is tasked with looking after the expansion of the food business under Boon Rawd Brewery Group, both for domestic and international markets.
The balance will go to finance the brewery's supply chain development.
Mr Piti said the expansion of the food business stems from the company's belief that food is one of the four necessities of life and will not be affected by any digital disruption.
Food Factors aims to develop a strategic network for its food business by co-investing with each country's local manufacturers.
The company is in negotiations with 3-4 manufacturers and expects to finalise deals in the second half of this year.
"In the past, Boon Rawd Brewery has had to rely on Singha Beer's network for expanding its food business, but after our own food company is established, our network will be much wider, especially abroad," said Mr Piti.
Boon Rawd Brewery has expanded its food business mainly via beer distributing companies over the past eight years. About 80% of food sales are from the domestic market and the rest go to the export market.
Mr Piti said with the new wholly-owned food subsidiary, seeking potential partners will become easier, particularly overseas.
He said in the past many foreign companies have refused to enter talks for any form of partnership with the group, fearing they would be dominated by Boon Rawd's size.
Mr Piti predicts sales of the group's food business will reach 15 billion baht by 2020, up from 2.5 billion last year.
Two Boon Rawd Brewery subsidiaries were the largest contributors to last year's sales, which helped expand the group's food business -- Hesco Solution Co, the producer of sauces and prepared meals and Mahasal Co, which produces Pandee brand packed rice and rice products.
Mr Piti said Boon Rawd Brewery's food business will also focus on developing Thai products, in the forms of frozen food and ready meals, to respond to ever-changing and diverse consumer needs.
He said the new food subsidiary focus for the first year will be on the Thai market.
Over the next three years, the company plans to raise sales from international markets to 80% of the total.
The company has already set up a food lab in Pathum Thani province for product research and development.
"Europe will be the company's main focus for expansion because our products can generate high profits in that markert, with Asean markets next on the list," Mr Piti said, adding that if the food business expansion is successful, this model will later be later applied to the company's international drink business.
In a related development, Boon Rawd has also decided to relocate Hesco Solution's manufacturing base in Kratumban, Samut Sakhon and Bang Na to the World Food Valley Thailand plant in Ang Thong province.