Speaking in an interview with Bloomberg, Frank Lin the maker of Master Kong brand ready-to-drink teas and snacks is seeking acquisitions, and will likely form a new strategic alliance next year using its US$1.6bn acquisitions war chest to stave off competition from global food companies such as Nestle.
Faster way to expand
“For the instant food business, we choose mergers and acquisitions instead of organic growth because it’s faster to expand our presence in the China market,” Lin told the business wire. No final decision has been made on the acquisition and alliance plans, and Tingyi will focus on deals in China over the next five years.
More than half of the company’s revenue comes from from beverages, with instant noodles delivering 43% and 2.5% from instant foods, which include sandwich snacks, muffins and egg rolls. Tingyi will also start importing infant formula from Asahi Group’s Wakodo baby nutrition to China this year.
Tingyi’s beverage sales next year will probably increase at twice the more than 7% expansion in China’s economy analysts forecast for 2014, and instant noodle sales would rise one-and-a-half times faster, Bloomberg reported.
Growth drivers
“Our drinks and instant noodles businesses will still be the growth drivers for the company next year,” Lin said. “Any impact to consumer demand in 2014 will be very limited.”
The company has been expanding its co-operation with overseas partners after signing a bottling franchisee agreement in 2011 with PepsiCo which allows the Chinese company to make and sell its non-alcoholic drinks in the country.
Tingyi, Japanese snackmaker Calbee and Tokyo-based Itochu agreed in April last year to form a snack manufacturing venture in China.
Tingyi is also considering separating its food and beverage businesses and seeks listing to “improve operations and maximise shareholders’ interest,” the executive said, adding the company doesn’t have a timetable.