Diversification seen as way to boost growth

S Khon Kaen Food Industry, a meat-based processed-food producer, is diversifying into more ready-to-eat food and establishing overseas franchises as a marketing strategy to boost growth during tough economic times.

Next month the company will launch new ready-to-eat Thai and Chinese dishes to the market after a few years' development. It will also establish franchised noodle kiosks for overseas sales.

The move will also overcome a slowdown in domestic consumption during a period of political instability and sluggish economic growth which has negatively affected the company's sales revenue.

"We must diversify our business to produce a variety of products to serve different consumers' demand. The production of ready-to-eat meals will not only create value-added products, but also increase sales revenue," said CEO Charoen Rujirasopon.

The company's major products are meat-based processed food including fermented sausage, Vietnamese sausage, Northern-style sausage and dried beef.

Initially the firm will launch five ready-to-eat meals under the "Yunnan" brand name next month. The retail price is expected to be Bt30 per pack, affordable to all classes of consumers, in particular lower- and middle-income groups demanding convenience in food preparation.

The new products will be sold at modern retail outlets and S Khon Kaen's kiosks nationwide.

Charoen said the company would continue to create new dishes of Thai and Chinese food.

He said the company wanted to increase domestic sales despite the economic slowdown and thus must diversify production lines to produce goods to serve a variety of demands.

The firm expects to generate Bt900 million in sales this year. At present 88 per cent of its income comes from domestic sales and 12 per cent from exports.

The company will diversify its business next year to franchise noodle shops overseas, in particular in Eastern Europe. The kiosks will use meatball products of the company as major ingredients. This strategy should suit consumers as Thai-style noodles have increased in popularity among consumers in Europe.

He said the company was drafting a business plan for franchises to expand overseas. It will release details next year.

S Khon Kaen operates a franchise factory in Poland. The Paruzel firm has to pay a royalty fee to the company. This factory produces S Khon Kaen products to serve more than a million Thais living in the EU, as well as other Asians and Westerners who like traditional Thai food.