Nichirei's interest lies in fostering production and sales in Sotheast Asia. (Photo: Cholimex Food/FIS)
Nichirei acquires stake in Vietnamese food firm
Wednesday, March 21, 2012, 01:20 (GMT + 9)
Leading Japanese seafood and processed food maker Nichirei Corp has entered into a capital association with Vietnamese food company Cholimex Food JSC.
Nichirei's subsidiary, Nichirei Foods Co, Ltd, has acquired 19 per cent of Cholimex's equity for USD 6.25 million and will provide it with frozen food manufacturing and other technologies.
Nichirei wants to eventually increase the ratio of equity investment in its Vietnamese partner in an attempt to foster it as a base of production and sales in Southeast Asia, Nihon Keizai Shimbun reports.
For the long term, Nichirei hopes to get a foothold in Asia’s frozen food market, where the potential of growth is high. Nichirei’s is the first attempt by a major Japanese frozen food maker to set up shop in Vietnam.
Cholimex's main line of products consists of seasonings, with the top share in chili sauce used in Vietnamese dishes, and also exports frozen food, mainly to Europe. Its current annual sales stand at about JPY 2 billion (USD 23.99 million), with the growth rate at 30 per cent per annum during the past few years.
First, Nichirei will dispatch its officials to Cholimex to help expand its frozen product line from simple processed foods like fried shrimp to diverse processed products, such as deep-frying without coating. It also hopes to develop new products together.
Nichirei says it will consider raising the investment rate within two years, depending on the cooperation’s progress. It will then launch into exports of its group firms' products to other Southeast Asian countries.
The market scale of frozen food in Vietnam is estimated at roughly JPY 10 billion (USD 119.97 million). For Thailand—the base of production for export to Japan and the West-- it is estimated at JPY 25 billion (USD 299.9 million).
The frozen food market in Southeast Asia is still budding when compared with Japan’s market scale of about JPY 830 billion (USD 9.96 billion).
Nichirei's overall food business is in the scale of about JPY 160 billion (USD 1.9 billion), with overseas sales making up only 5 per cent. By fortifying its sales in Southeast Asia, the company hopes to boost its overseas sales ratio to 19 per cent.
By Natalia Real