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Samjo starts up new plant with eye on China’s bakery market

By Ankush Chibber , 28-Oct-2013

Samjo starts up new plant with eye on China’s bakery market

Korean food firm Samjo Celltech is set to begin production of sauces and seasonings at its new plant in the Chinese city of Weihai in eastern Shandong Province, the company said on Monday.

Samjo, which is a subsidiary of Korean food major Dongwon Food & Beverage, will begin full operations at the plant with an eye on the burgeoning Chinese packaged food market, it said.

The company said that it has set a goal of achieving the sales revenue of US$14m in 2014, with over US$37m sales revenue within three years. The company reached sales revenue of US$114m last year, with most of the sales realised in business-to-business transactions.

Strong demand for sauces

“As more and more Korean food companies move in to the Chinese market in areas such as tuna cans, pizza, and baked goods, we figure there will be strong demand for sauces and seasonings,” said Jeong Yong-se, president at Samjo Celltech.

The company is laying its China bets on its two main customers, Paris Baguette and Tous Les Jours, both Korea-based companies, who have announced their plans to expand their store location numbers in China.

While Paris Baguette plans to increase its store locations in China up to 500 by 2015, Tous Les Jours plans to increase its locations to 1,600 by 2017. Currently the two bakery operators have 125 and 34 stores in China, respectively.

The company will also supply seasoning ingredients from the plant to Orion Confectionery China, which it claims has more than US$942m in sales revenue in China alone. 

East meets West

According to a report from research firm Canadean, cakes, pastries and sweet pies are being scoffed in great volumes and now hold 53.5% of the bakery market share in China thanks to the ever-­expanding, urbanised middle class.

“As Chinese consumers demand increasingly higher sanitary and safety standards, we expect that there will be stronger demand for Korean-brand food items,” said Jeong.

Another important customer, Mr. Pizza, plans to establish up to 1,000 locations in China by 2018 from current 23.

According to another report from Canadean, the increasingly western nature of food and drink products in China has helped pizza to become the fastest growing category of the prepared meals space, with a value and volume annual growth rate of 11.2% and 81.5 respectively to 2017.

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