January 4, 2017

Thailand’s Charoen Pokphand Foods Plc (CP Foods) announced it has agreed to acquire a 33 percent stake in Polish poultry group, SuperDrob for $51.5 million.

Established 23 years ago, family-run SuperDrob has six subsidiaries and major processing plants located in Karczew and Lódz from where it produces fresh poultry meat along with a range of prepared chicken products including grilled and breaded stuffed chicken and chicken nuggets, as well as sausages and ham that it sells under its own brand.

The company exports approximately half of its products across Europe to Great Britain, France, Germany and other EU countries as well as to China. In 2015 its sales saw a year-on-year jump of 10 percent to reach a value of €212.4 million (US$222.5 million).

With such an existing export network, this acquisition will significantly strengthen CP Foods presence in the European market and will build upon its previous acquisition of an 80 percent stake in a Russian poultry firm from Netherlands-based company, Agro-Invest Brinky B.V. in 2015 for $680 million in cash.

It also gives CP Foods a foothold in the top poultry producing country in the EU bloc.

Poland

A recent Global Agricultural Information Network (GAIN) report issued by the U.S. Department of Agriculture (USDA) on December 12, 2016 concluded that Poland retains its rank as the major poultry producer of the EU.

In 2015 Poland saw poultry production total 2,386,000 tons – a seven percent increase over the year before, and in 2016, output is expected to have jumped an additional 15 percent due to higher domestic consumption levels based on health perceptions regarding poultry meat and better price points compared to beef. These trends have lifted the estimated per capita consumption of poultry meat in Poland in 2016 to 28.5 kilograms per person, or five percent higher than the year before.

Poland’s poultry exports for 2015 totaled 698,970 tons, reflecting a 20 percent increase over 2014, while also reflecting a trend that the USDA expects to have continued through 2016 based on sustained high demand from other EU and Asian countries.

These trends, along with low prices for compound feeds resulting in low cost of production, have not been lost on CP Foods.

“Poland is considered as a leading country in exporting poultry into the European market,” said Adirek Sripratak, president and CEO of CPF in a company statement. “The country has vast resources and potential with low cost of production. This will also help respond better to the regional consumer base at a faster pace, as well as the opportunity to expand into other businesses that CPF has expertise in Poland, and connect with CPF’s current network in Asia and Europe in order to create more value in the future.”

By acquiring a presence in Poland, not only will CP Foods gain greater access to the wider EU market, the deal also may result in CPF gaining greater access to even more lucrative markets as well, as the USDA states in its recent GAIN report that the Polish government is currently working toward obtaining eligibility to export to new markets including the U.S.

Eye on the U.S.

CP Foods has had a busy fourth quarter. This deal for SuperDrob follows little more than a month after the group agreed to acquire U.S.-based frozen food company, Bellisio Parent LLC, the third largest producer of single serve frozen entrees in the country, from private equity firm, Centre Partners for just under $1.1 billion.

Founded in the early 1990s in Minneapolis, Minn., Bellisio Foods produces more than two million frozen meals per day under the Atkins, Eating Well, Michelina’s, Boston Market, Eat!, and Chili’s brands. With four production facilities located in Ohio, California, and Minnesota, the company posted sales of $668 million for the period ending September 11.

The acquisition of the company is expected to provide CPF an entry into the top food market in the world as the group’s billionaire owner, Dhanin Chearavanont, seeks to expand CPF’s global reach as domestic market growth slows.

Concerns over the expense of the deal and the effects it may have on CPF’s bottom line resulted in the group’s shares falling by 5.2 percent to a five-week low after it was announced in mid-November according to Reuters; however these concerns have not seemed to cool CPF’s drive for global expansion.

– Lynda Kiernan