March 26, 2017

Major Thai agribusiness conglomerate CP Group plans to invest $2 billion over the next five years in an integrated livestock production facility in the Philippines that will produce poultry and pork for both the domestic and export markets. Of this total, US$500 million is earmarked to be invested within this year.

CP reportedly chose the Philippines as its target for expansion due to the fact that the country is the only country in Asia that has not reported contamination of foot and mouth disease, or avian influenza.

The overarching livestock project will include 10 units of 6,000 hectares each for corn and soybean production to be used for feed production. The Philippine Department of Agriculture will create a technical working group to work with the CP Group to identify the optimum locations for the new operation. Already active in the Luzon region, top sites in consideration for CP Group’s new project include Bukidnon, Saranggani, North Cotabato, Maguindanao, Zamboanga del Norte, Agusan del Sur and Del Norte provinces, according to the Manila Standard.

“They are integrated, a farm to table company. From feeds milling to poultry and livestock production using new technology, to ready to cook and marinated frozen chicken and pork products, this is what the company’s expertise is about,” Philippine Trade Secretary Ramon Lopez told the Manila Standard.

A Busy Quarter

This investment announcement by CP Group comes on the heels of a busy quarter for the group. In the first days of January 2017, the group announced it had agreed to acquire a 33 percent stake in Polish poultry group SuperDrob for $51.5 million – giving CP a foothold in the top poultry producing country in the EU bloc.

Less than three months prior, CP announced it had 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.

The deal for Superdrob gives CP access to a dynamic market. 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.

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.

Speaking of the U.S… news of the billion-dollar deal for Bellisio reinforces a recent uptick of acquisitions of U.S. frozen food operations.

Within the same week, GAI News reported that Ireland-based convenience food giant Greencore Group announced it had agreed to acquire Peacock Foods from private equity firm Charlesbank in a $747.5 million deal that will quadruple Greencore’s U.S. business.

In addition, Portland, Oregon-based private equity firm Endeavour Capital agreed to acquire OFD Foods, the largest diversified freeze-dried food and products company in North America, for an undisclosed amount. Additionally, private equity firm Graham Partners announced it has agreed to acquire freeze-dried food company Mercer Foods from private equity firms Fontenac Co. and Lake Pacific Partners.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.