Mu Inter Group in retail pork venture

Blast freeze room

Backed by a new processing plant in Lampoon, Mu Inter Group Co Ltd plans to increase production capacity, extend its reach into community markets and lure more food service clients.

Narong Thammajaree, managing director, said the new 60-million-baht plant commissioned in November will support the company’s sales in upper northern markets. The new plant complements three existing processing facilities in Chiang Mai, Sukhothai and Nan.

Narong Thammajaree

As of Q4, 2017 Mu Inter now processes around 600 head/day. The products are distributed to food service customers and 50 retail outlets that it owns in Thailand’s northern provinces.

Mu Inter plans to open five more new outlets every month. The only bottleneck at this point is training enough staff to keep up with the growing company’s needs, he said.

The company’s strategy is to offer time- saving products that make meal preparation easier.

Various ready-to-cook products dominate the shelves, and all goods must be sold out with no returns because pork is highly perishable. Taking unsold items back is deemed not worth the cost of handling.

A point-of-sale system driven by real- time information instantaneously updates inventory status and helps area managers arrange promotions to accelerate sales of slow-moving goods. Outlets can also swap goods if necessary to improve inventory management.

Prices are flexible, but based on production cost and market demand, he added.

Live animal supply chain

The company works with more than 1,500 contract growers, each with 20-300 finishing hogs. The growers are free to choose the breed. However, the breed must be approved by Mu Inter’s extension team. Extension staff and veterinarians visit growers regularly to provide technical services.

Since the operation is small and well-monitored, problems from the field can be detected early and solved promptly before they get out of hand. Antibiotics are only used for specific treatments and prescribed by qualified veterinarians, said Mr Narong.

Besides farming, its core focus is processing, sales and distribution. The company, which handles around 30,000 head/per cycle, buys around 10,000 head from suppliers to augment its own production.

Mu Inter Group’s latest processing plant worth 60 million baht situated on a seven hectare compound in Lampoon

Currently, the company maintains a gross margin of around 16% and net pro t around 5-6%.

Its main customers are food service clients. Staff at the processing plant prepare the meat to order requirements. Still, retail customer growth is robust.

“We position ourselves as a customer ally and the partner of choice. Customers buy our products because they are high quality and offer good value,” Mr Narong said. The company offers four brands to cover all segments in the market. MP Fresh Pork is the premium segment.

To capitalize on the promising growth trend in the north, the company recently opened new outlets in Lampang, Nan. It plans to add more outlets in Sukhothai in Q4, 2017.

The company distributes hog feed in Lampoon, Lampang, Fang district, Chiang Mai, Nan and Sukhothai. Feed sales to customers and contract growers in the north currently exceed 3,000 tonnes/month. Mu Inter is also a sales agent of Thai Foods Group (Plc) for hog feed.

The company has recently started processing and marketing pork in north- eastern Thailand. It is leasing a slaughterhouse in Khon Kaen and selling hog feed in the area.

Mr Narong started hog farming in early 2000, but sold his farm in 2006 just as hog prices peaked. He later invested 20 million baht in a processing plant in Lampoon with a capacity of 55 head/hour.

Shortly after taking over the operation, he found that his processing plant was operating under capacity due to a shortage of hogs. He started a finisher operation to keep the plant running and later began recruiting contract growers.

The company has 500 employees and has so far sustained a compound annual growth rate (CAGR) above 30%.