CMCF intensifies efforts to expand into pet food business

CMCF intensifies efforts to expand into pet food business

Canned seafood being processed at Chotiwat Manufacturing. Mr Somboon says competition among standard processed seafood products is fierce, leading to low profit margins due to price wars.
Canned seafood being processed at Chotiwat Manufacturing. Mr Somboon says competition among standard processed seafood products is fierce, leading to low profit margins due to price wars.

Chotiwat Manufacturing Plc (CMCF), a processed seafood producer, is ramping up efforts to expand into the pet food business to reduce risks and sustain its business growth over the longer term.

Somboon Chotiwattanaphan, CMCF's chief financial officer, said the company will focus more on expanding into the pet food business because market demand is expected to continue growing by an average of 6% a year, outstripping that of standard processed seafood products, which are forecast to have an average annual increase of 5%.

According to Mr Somboon, competition among standard processed seafood products is fierce, leading to low profit margins due to price wars.

CMCF reported total sales revenue of 6.74 billion baht in 2020, with 5.72 billion from processed seafood in cans and vacuum bags, 744 million from its pet food business and 283 million from other products.

Sales from the firm's pet food business accounted for 11% of total sales in 2020, rising to 15% in the first quarter this year.

CMCF expects the pet food business will contribute 30% to its total sales in the near future.

The company exports pet food via original equipment manufacturers to several markets including the US, the UK, Italy, Belgium, Germany, Russia and China.

It is looking to expand its pet food sales in new markets, including within Asia.

In addition to expansion on the international market, CMCF is studying the market potential of its own brand of pet food.

According to Mr Somboon, another of the firm's strategies is to expand in processed seafood made from tuna, which has high-growth potential.

PT Lautindo Synergy Sejahtera (LSS), a processor and distributor of frozen, trimmed tuna in Indonesia, plans to produce and distribute processed tuna in vacuum bags together with other varieties of products, he said.

CMCF recently acquired a 49% stake in LSS.

CMCF has a total annual production capacity of 87,900 tonnes of processed seafood in cans, pouches and pet food products, as well as 14,000 tonnes of fishmeal products in Thailand.

LSS produces 12,700 tonnes of frozen tuna loin products.

Mr Somboon said CMCF should gain additional earnings from the production and distribution of its own brands, including its MPRO liquid food supplement, which is a functional food for health-conscious and elderly people. The product has been sold at hospitals since last year.

Another of its own brands is EzyQuic, a ready-to-eat meal containing meat, vegetables and cereals, suitable for organisations requiring food ready to be served at various events or functions.

Somneuk Chotiwattanaphan, CMCF's chief executive, said the company submitted filings to the Securities and Exchange Commission for an initial public offering (IPO) of no more than 187.5 million shares, equivalent to 30% of outstanding shares, comprising 125 million shares held by CMCF and 62.5 million shares held by CH Group Capital.

The filings were approved and the firm is in the process of launching an IPO.

CMCF has four main lines of business comprising production and distribution: processed seafood in cans and vacuum bags, which generates more than 80% of sales; pet food; other types of food products; and seafood by-products such as fishmeal for livestock feed.

The firm operates two production facilities in the Hat Yai district of Songkhla province, producing processed seafood in cans and vacuum bags, pet food and other products, as well as fishmeal for livestock feed.

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