CP-Meiji begins B2bn plant capacity expansion

CP-Meiji Co will embark on a 2-billion-baht expansion of its dairy product capacity to support growing domestic and international demand.

Prasit Boondoungprasert, president of the joint venture between the CP Group and Japan's Meiji Co, said the expansion at its factory in Saraburi's Muak Lek district would have three phases over two years starting with cultured yoghurt, followed by cup yoghurt and pasteurised milk.

Work will be completed in 2013, and the company expects to purchase up to 400 tonnes of raw milk per day by 2016, up from 220 tonnes now.

It has put together a team to help its 1,000 contract farmers increase their productivity to meet the demand for more raw milk.

"People's growing health concerns and the government's pledge to increase the daily minimum wage to 300 baht will benefit dairy product consumption," said Mr Prasit.

CP-Meiji also plans to start exporting its pasteurised milk to Hong Kong.

"Hong Kong is very attractive for us because there are only a few competitors," he said. "People there have high incomes, and per-capita consumption of dairy products is 40-50 litres per year, compared with only 14 in Thailand."

CP-Meiji has requested approval from the local Food and Drug Administration to market its products in the territory and expects to start exports this year.

After Hong Kong, the company will seek a sole distributor in Malaysia next year and conduct a feasibility study over two or three years into building a dairy in Vietnam.

The company has been exporting fresh milk to Singapore for a decade.

"The fresh-milk market in Singapore is very tough, with at least 10 international brands from countries such as the US, Australia, New Zealand and Indonesia. But Meiji tops the fresh-milk market there with a 34% share," he said.

The company's total first-half sales grew by 15%, beating the projection of 10%. Full-year sales are forecast at 4.1 billion baht, up from 3.7 billion last year, and expected to double in five years.

Exports account for 20-22% of sales, with the proportion expected to rise to 25-30% in the future.