Kerry targets M&A for regional sourcing
Kerry Ingredients, an Irish manufacturer of food and drinks, is seeking merger and acquisition (M&A) deals to expand its business in Thailand.
“As we believe there is opportunity for growth in this industry, the parent company’s strategy is aimed at new M&A deals to keep operations within economies of scale across Southeast Asia,” said Paul Potter, commercial director of the local arm, Kerry Ingredients Thailand.
“Kerry is in talks with 6-7 companies in the food and beverage industry in this region,” he said.
Mr Potter added that Kerry is interested in expanding its manufacturing facilities as part of the government’s Eastern Economic Corridor (EEC) scheme, located in Chachoengsao, Chon Buri and Rayong provinces.
At present, Kerry has a manufacturing plant at Bangpoo Industrial Estate in Samut Prakan.
“The corridor is a huge opportunity for all investors, especially in the new targeted industries, to focus on implementing higher technology to mobilise the country’s economy,” Mr Potter said.
He said Kerry expanded its first centre of excellence for meat at Bangpoo a few years ago into the Southeast Asian development and application centre.
The centre is part of a larger series of Kerry’s Bangpoo facility expansions, designed to increase innovation pipelines and enhance research and application capabilities over more than 8,500 square metres.
Kiattisak Racsenawanich, the local firm’s financial controller and director, said Kerry aims for further expansion of the production facility in the EEC provinces, thanks to government incentives offered to attract investors.
The Bangpoo plant’s total food production capacity is 20,000 tonnes per year, and the utilisation rate is 70%.
“Kerry is seeking a new area in the corridor, and the expansion will cover demand on a global level,” Mr Kiattisak said. “Thailand has been chosen as the top priority country for Kerry’s regional hub.”
Established in 2002, Kerry Ingredients Thailand employs 230 people.
The local company exports specialty ingredients for meats, snacks and bakery items, representing 40% of production capacity, and also supplies all products to local customers, accounting for 60%.
On a global level, Kerry’s 2017 revenue was €6.41 billion (243 billion baht), up 4.5% from 2016, and its trading profit rose by 4.2% to €781 million.
Kerry operates in 27 countries worldwide with more than 24,000 employees.
The US contributed 54% of Kerry’s 2017 revenue, while Europe, the Middle East and Africa together represented 30% of total revenue.
“The Asia-Pacific market accounted for 16%,” Mr Kiattisak said.
Kanchana Noppun, executive director for the investment services centre at the Board of Investment (BoI), said Kerry’s local arm was granted investment incentives to manufacture food flavouring.
The company recently also won privileges for its local research and development unit.
“Kerry is in the process of applying for BoI incentives under a programme to upgrade machinery efficiency that the BoI is opening to encourage investors to spend on and increase their production efficiency,” Ms Kanchana said.
She said functional and medical foods are trending globally as middle-class consumers experience lifestyle changes and urbanisation rises.
The BoI has a policy to promote and support investors who enter this industry, as it is related to the country’s agricultural sector and crops such as rice, palm, cassava and sugar cane.