Yinlu Foods ready for $1/2bn expansion

Chinese foodmaker Yinlu Foods Group has announced plans to spend almost half a billion dollars in the construction of two new factories. The investment will serve to increase capacity by two-thirds.

Costing US$480m, the new plants will raise production of ready-to-drink peanut milk and ready-to-eat rice porridge to 5m tonnes a year by the end of 2014 from the current 3m tonnes, Chen Quingyuan, Yinlu’s chairman, told Bloomberg in an interview at the foodmaker’s plant in Hubei province.

Nestlé bought a 60 percent stake in Yinlu last year as the Switzerland-based company sought to increase business in emerging markets. A new plant in Anhui province will start production by the end of this year, while a factory in Sichuan will begin output in 2014, Chen said.

“Per capita consumption is starting from a low base and is growing every year,” with significant potential to expand, Chen told the news service.

Yinlu had sales of around US$812m in 2010 but hasn’t disclosed revenue numbers since then. The company’s goal is to boost revenue by a double-digit percentage annually over the next three to five years as per-capita consumption rises and consumers focus more on nutrition.

Chen was one of the founders of Yinlu in 1985 and the company has since expanded to three factories in China, with more than 10,000 employees. Nestlé last year also acquired a 60% stake in Hsu Fu Chi International, a Chinese snack maker.