Chi­nese firm eyes F&B seg­ment in world mar­kets

The Pak Banker - - COMPANIES/BOSS -

China's Zie­mann Holvrieka Asia Co Ltd, a spe­cial­ist in beer-mak­ing equip­ment and food-and-bev­er­age plants, will de­ploy more re­sources, in­clud­ing hu­man re­sources, in emerg­ing mar­kets such as Viet­nam, Nige­ria and Mex­ico this year, to com­pete with other es­tab­lished ri­vals in the re­gion.

The sub­sidiary of China In­ter­na­tional Marine Con­tain­ers (Group) Ltd, the coun­try's largest trans­porta­tion equip­ment pro­ducer by rev­enue, has al­ready shipped beer-mak­ing equip­ment to Brazil and South Korea, and built food-and-bev­er­age plants for clients in Rus­sia, Aus­tralia and Ethiopia. The Nan­tong-based Zie­mann Holvrieka has a 40 per­cent share of the do­mes­tic mar­ket.

The com­pany has de­cided to take up en­gi­neer­ing, pro­cure­ment and con­struc­tion or EPC projects in emerg­ing mar­kets. EPC is a com­mon form of con­tract­ing in the con­struc­tion in­dus­try. Zie­mann Holvrieka will also sup­ply equip­ment used to make juice, soy sauce, ed­i­ble oil, dairy prod­ucts and food to th­ese mar­kets as com­pa­nies there seek to di­ver­sify their prod­uct cat­e­gories and upgrade their tech­nol­ogy.

Lars Roed, gen­eral man­ager of Zie­mann Holvrieka, said ris­ing in­comes and ac­cel­er­at­ing ur­ban­iza­tion in emerg­ing mar­kets are driv­ing de­mand for more di­ver­si­fied con­ve­nience drinks and di­ets.

"Higher in­come has also in­creased the con­sump­tion of beer, bev­er­age, dairy, pro­teins and veg­etable oils," Roed said. "Bev­er­age and pack­aged food com­pa­nies are also ex­pected to reap ro­bust re­turns from coun­tries such as Viet­nam, Nige­ria and An­gola." Roed said many com­pa­nies found the bev­er­age in­dus­try has trans­formed dra­mat­i­cally in many emerg­ing mar­kets.

Beer de­mand in Nige­ria will surge to 2.7 bil­lion liters this year be­cause of its grow­ing pop­u­la­tion. How­ever, the coun­try is still fac­ing beer short­age of 300 mil­lion liters. The coun­try re­lies heav­ily on ship­ments from Europe and the US, ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund data.

CIMC En­ric Hold­ings Ltd, the en­ergy equip­ment man­u­fac­tur­ing sub­sidiary of CIMC, had ac­quired the Nether­lands­based Holvrieka Hold­ing BV and Ger­many's Zie­mann In­ter­na­tional GmbH, the two ma­jor beer-mak­ers, in 2007 and 2012 re­spec­tively. The idea was to gain more cut­tingedge tech­nolo­gies to com­pete with ri­vals. The two were given a com­mon name, Zie­mann Holvrieka.

Zie­mann Holvrieka so far has bagged more than 120 beer-mak­ing EPC projects in 33 coun­tries and re­gions, in­clud­ing Mon­go­lia, Sin­ga­pore and Pa­pua New Guinea. It has seven man­u­fac­tur­ing plants in Asia and Europe and it plans to build more fac­to­ries in emerg­ing mar­kets to se­cure more mar­ket share.

"The most ob­vi­ous op­por­tu­nity is the mod­ern­iza­tion of bev­er­age and the food sup­ply chain. That is a big area and there are lots of in­vest­ments go­ing on there," said Roed. "The de­mand for beer, milk, yo­gurt, juice and soft drinks will also pro­vide all sorts of op­por­tu­ni­ties for equip­ment and in­gre­di­ent busi­nesses. We have seen lots of po­ten­tial in this sec­tor, not only in China, but in many dy­namic emerg­ing economies."

Zie­mann Holvrieka's fac­tory in Nan­tong earned more than 100 mil­lion yuan ($15.34 mil­lion) in over­seas mar­kets by sup­ply­ing beer-mak­ing equip­ment and plant de­vel­op­ment projects in 2015, up 10 per­cent year-on-year.

As China is up­grad­ing its man­u­fac­tur­ing, the do­mes­tic beer seg­ment will inevitably en­ter an era of sat­u­ra­tion where mar­ket con­di­tions will be tough, Roed said.

Ow­ing to slug­gish mar­ket con­di­tions, Carls­berg, the world's fourth-largest beer brewer, plans to close fac­to­ries in East China be­fore 2018, in­clud­ing some of the as­sets it ac­quired from Chongqing Beer (Group) Co Ltd in An­hui and Zhe­jiang provinces.

So, the ASEAN re­gion and South Amer­ica will be key to Zie­mann Holvrieka as it in­creases its in­vest­ment in mar­ket­ing and re­source in­te­gra­tion over the next five years, Roed said. "The great chal­lenge is keep­ing sup­ply and de­mand in bal­ance in new mar­kets.

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