Kerry expands in China

Related tags Food Flavor Kerry

Irish food group Kerry joins the growing competition in the dynamic
Chinese food market, this week announcing a €20 million investment
programme to expand its presence there.

The successful ingredients company, with €4 billion in annual sales, will strike into China's €28 billion packaged food market, currently growing at a healthy 7.5 per cent a year.

The hub of the programme is the acquisition of Chinese food firm Lanli, located in the Hangzhou region near to Shanghai, that will add a new manufacturing plant and technical centre to Kerry's repertoire.

Kerry joins a raft of other ingredients companies gradually taking root in the region. Their presence, more often than not, reflects moves by their global customers into the exploding Chinese food market.

China food industry sales took off in the mid 1990s rising from under 100 billion yuan (€9.2bn) in 1991 to well over 400 billion yuan (€37bn) just ten years later.

Driving the market is the increased spending power and changing eating habits of China's 1.3 billion people who are transforming the country's food sector, both domestically and in foreign trade.

There has been an increase in per capita income levels, and the consequent increase in disposable incomes has brought about a shift in favour of branded and packaged food.

Changing lifestyles and growing urbanisation in larger cities have also contributed, bringing a wider acceptance of newer products and driving sales for foods like ready meals, pasta and frozen food.

Kerry's considerable investment comes just four years after the Irish firm set up its first office in Shanghai. Since then Kerry Ingredients and Mastertaste (flavours and fragrance) divisions have progressively expanded and more recently, the new Kerry Bio-Science division, set up following the recent acquisition of Quest Food Ingredients in May 2004.

"Kerry's food ingredients and flavour technologies will be focused on the significant growth opportunities in China in the food processing and foodservice sectors - particularly in nutritional, dairy, flavoured noodle, brewing, flavoured beverage, snack and bakery market segments,"​ Hugh Friel, chief executive of the Kerry group said from China this week, there to sign off the deal.

The acquisition of Lanli is due to be completed by the end of March 2005.

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