GEARING UP
Agro-industrial giant Betagro is committed to ramping up 2019 investment to the highest level in seven years.
With a 10-year strategic plan about to end, Betagro Group, one of Thailand’s biggest agro-industrial and food companies, is committed to ramping up investment next year to the highest level in seven years. Vasit Taepaisitphongse, the group’s president and chief executive, said the company will splurge more than 5 billion baht in 2019, the final year of its 10-year strategic plan, higher than average annual spending.
The group’s 10-year plan commenced in 2010 with the aim to raise the market share for all segments — food protein (pigs, chicken, eggs), animal feed and animal pharmaceuticals — to 15% from 12-13%, and doubling sales to more than 100 billion baht by the end of the plan.
Mr Vasit said the company has captured an average market share of 12-14% in all segments, slightly below the 15% goal.
“Under the current 10-year strategic plan, we are committed to spending an average of 3 billion baht a year in fixed assets, such as the new factory or new farms, but real investment totals only 2-3 billion baht a year,” he said. “The farm industry is by nature volatile, and Thailand’s overall food protein market in the first 5-6 years of our plan averaged 5% growth. We also have envisaged the market’s slowdown notably over the last few years to only 3% growth, as domestic purchasing power remains bearish and oversupply has put pressure on the overall farm product prices.”
FUTURE FOCUS
Mr Vasit said next year’s investment will be largely slated to new strategic transformation projects like value-added products, automation at factories and upstream products such as grandparent stock and parent stock at home and abroad.
The investment will also support the group’s supply chain development in agribusiness (animal feeds, pharmaceuticals and pet care), food (animal farming/slaughterhouse, added value and
distribution) and international operations, mainly in upstream factories in Vientiane and Pakse in Laos, as well as in Cambodia and Myanmar.
“We’re investing in Myanmar by the middle of next year,” Mr Vasit said. “We are handling legal issues, joint venture agreements and the land contract for the planned animal feed factory, with an estimated investment of 500-800 million baht at Yangon. We’re also expanding our factory in Cambodia and probably investing in the slaughterhouse there.”
He said the group’s overseas operations will stay focused on animal feed, farming and livestock expansion, with no mission to diversify out of core businesses.
“We still see opportunity in the food business,” Mr Vasit said. “Our focus is to upgrade the quality of products and offer alternative products and fair prices to consumers.”
Founded in 1967 to make and distribute animal feed, Betagro Group operates a wide range of agriculture-related business, such as chicken and swine farms, eggs, processed meat, animal drugs and pet food, from 30 factories.
The company reported sales last year of more than 90 billion baht, 80% of which stemmed from domestic sales and the rest from exports. Sales revenue is expected to grow 12% this year.
Mr Vasit said the company is looking to upgrade three of seven large chicken factories in Thailand to produce for export.
“We’ve already had target areas to be developed as factories, such as Chiang Mai, and some upper southern provinces where we earlier used to have a livestock base,” he said. “We aim [through those factories] to add value to live animals to upgrade protein quality in the region.”
PROTEIN PIPELINE
Mr Vasit said the group’s investment will also focus on future protein.
“We’re looking for new technology related to in vitro meats, but we are focusing on peptide aminos at this time, a field Betagro gives great importance to,” he said. “We have commercial products sold to Japan that are used as ingredients for food and cosmetic supplements. We are also focusing on worms to be used for animal feed, and we’ve made a lot of progress in this area.”
In vitro meat is the manufacturing of meat products through “tissue engineering” technology.
Mr Vasit said the company has high hopes for its central kitchen at Navanakorn Industrial Estate.
Set to open in November, the 750-million-baht facility at the estate in Pathum Thani province will have a production capacity of 8,000 tonnes a year to develop food products in various categories that will be marketed under the group’s Betagro and S-Pure brands.
Six categories of food products will be developed at the centre: appetisers made with pork and chicken, processed egg such as peeled boiled egg and steamed egg, ready-to-eat meals, cuisine, baked goods, and seasonings such as Thai salad dressing and dips.
These products, with an emphasis on ready-to-eat meals, will be supplied to 200 Betagro shops nationwide, leading supermarkets such as Tops Market, Central Food Hall, Gourmet Market, Home Fresh Mart and Villa Market, and FamilyMart convenience stores.
The company expects the products to generate 650 million baht in sales.
“The new facility will be a key driver for Betagro to deliver ready-to-eat food to the supply chain in Bangkok for years to come,” Mr Vasit said. “We’re also in close talks with partners for original equipment manufacturer contracts and our own brands.”
Given the growing threat from disruptive technology, the group may team up with providers of last-mile delivery such as Foodpanda.
“Food has several categories,” Mr Vasit said. “Dry food and long shelf-life foods may be subject to easy disruption from distribution, but chilled food, fresh food and ready-to-eat food that are seen widely in Japan and the United States still rely heavily on production and short-distance transport. We may expand into the last-mile delivery segment, but we prefer partnering with existing providers such as SCG Logistics, Kerry Express and Lalamove.”