Bangkok Ranch Plc takes the food business plunge

(from left)Thanawat Aroonpun, Rosanna and Joseph Suchaovanich, Gertjan Tomassen, vice- chairman and managing director of Europe, and Gerard M. Elbertsen

WITH THE OPENING OF A NEW SUBSIDIARY, Bangkok Ranch Plc will begin offering pre-cooked items and meals to the food service industry, according to Joseph Suchaovanich, vice-chairman and man- aging director of Asia and Asia Pacific.

The new facility operated by Food City Co worth 500 million baht located in Pathum Thani will be ready to roll in the second half of 2017. The plant will supply further cooked products, duck meat- balls, duck patties, smoked duck breast, roast duck, salami and various ready-to- eat meals.

Highly versatile and equipped with four production lines for raw, grilled, steamed, and roasted meat, the facility can also do pre-dusting, battering and ready-to-eat meals including soup and fried rice.

Besides the core business of duck meat, Food City also makes noodles and won- ton wrappers with 30 tonnes/month capacity to supply food services, wholesalers, quick-service restaurants and more.

It recently opened a restaurant in Udon Thani and a coffee shop at Bangkok Ranch’s head office.

Boosting upstream operations

Rosanna Suchaovanich, chief operating officer, said construction of a new hatchery in Rayong worth 120 million baht was completed in March 2017. The new hatchery is capable of supplying 9.1 million ducklings/year, accounting for 44% of production at the company’s main hatchery in Petchaboon.

Its feed mill in Singhburi has an annual capacity of 138,000 tonnes.

It has invested over 220 million baht to acquire a duck farm in Sa Kaew, consisting of 22 houses with enough capacity for 220,000 ducks/cycle. The farm supplies around 10% of the company’s total processing capacity.

The company processed around 15 mil- lion ducks in 2016.

The company imported grand parent stock from Cherry Valley, UK, in Q3,

2016. As a result, a shortage of breeding stock is unlikely, said Ms Rosanna.

Sources say the outlook for duck exports is bullish due to the closure of VSE in Holland and greater market penetration in Cambodia, Hong Kong and Vietnam.

It is assessing the possibility of joining forces with Weng Fat Poultry based in Kosovo to undertake a duck further processing operation.

The company reported turnover of 8.1 billion baht for 2016, up from 7.7 billion baht year-on-year. Net profit was 213 million baht, down 61% from 2015. Gross margin in 2016 was 5.3% vs 10% in 2015, down 44%. Poor prices for duck meat in Europe and baht appreciation were blamed for the lackluster financial performance.

In a related development, the company has established subsidiaries in neigh- boring countries to operate food services, restaurants, food imports and food related businesses. They are M&M Food Service (Cambodia), Asia Pacific International Trading Co (Vietnam); Golf Global Foods Co Ltd (Thailand); Win Thai Food (Hong Kong).

A second processing plant in Sa Kaew will be built in 2018 to augment the current plant in Bang Pli which is at full capacity. Net profit of 96 million baht in Q1, 2017, is expected.

In Thailand, the company’s main businesses are hatchery, feed, primary and further processing. Raw and cooked duck meat products account for 60% of turnover with the rest feed and sales of ducklings.

Mr Joseph added that Bangkok Ranch primarily exports further cooked duck meat to the UK and other markets in Europe. Raw and frozen duck meat is supplied mainly by its subsidiary in The Netherlands.

It has already submitted export documents to DLD. It is likely that Bangkok Ranch will be able to ship a small quantity to New Zealand this year after Q3, 2017.

Vibrant growth in Europe

Tomassen Duck-To Bangkok Ranch, a wholly owned subsidiary, is set to double capacity ahead of efforts to tap the wider European market following the closure of Dutch duck giant VSE.

Gerard M. Elbertsen, director, said price slashing by Eastern European operators gave Tomassen Duck-To a hard time until VSE, a Dutch duck grower cooperative, decided to shut down.

The closure of VSE gave Tomassen Duck-To (TDT) a chance to raise capacity and improve production costs. It also gained market access to Scandinavia, Germany and Spain besides its home base in The Netherlands.

As a result, the Dutch market will account for only 25% and the balance will be shipped to other markets in western Europe.

VSE, Holland’s 2nd largest duck processor, closed in September 2016 due to a flood of cheap meat from Poland and Hungary where production costs are estimated to be 15-30% lower. Apart from VSE, producers in Germany also suffered severely from the price war.

Tomassen Duck-To produces around five million ducks/year and expects to rev up annual production to over nine million

birds in 2017 due to carryover orders from VSE. This will make TDT the largest duck processor in The Netherlands.

TDT is capable of processing 22,000 ducks/day while VSE’s processing capacity is between 70,000 and 80,000 ducks per week.

Further cooked operations are handled by Lucky Duck, a sister company, which is capable of supplying 300,000 ducks/ year. In addition, Lucky Duck produces roasted pork and ingredients for Chinese restaurants.

Sales picked up in Q4, 2016, and the company expects to see enormous sales increases in 2017, said Mr Elbertsen.

It also acquired additional machines, skilled workers, and contract growers following the demise of VSE.

Cost advantages enjoyed by Polish and Hungarian producers could soon rise to match those of western Europe due to tighter EU regulations that come into effect in 2017, he said.

In 2016, it operated hatcheries supplying 155,000 eggs/week and producing 125,000 ducklings/week. There are 70 contract growers supplying around nine million ducks/year. The Holland operation contributed 2.5 billion baht to overall revenue, a slight increase from 2.1 billion baht in 2015.