Brazil's Marfrig considers Saudi factory

By Eliot Beer

- Last updated on GMT

Related tags Middle east United arab emirates Saudi arabia

Brazil's Marfrig considers Saudi factory
Brazilian food processor Marfrig is planning to set up its first factory in the Middle East within the next five years, with Saudi Arabia the most likely location.

Marfrig, the third-biggest food processor in Brazil, announced the plan earlier this month in its first-quarter earnings report, as part of the strategy for its food services subsidiary Keystone, acquired in 2010. The company is, “moving quickly to establish a local manufacturing presence in the Middle East​” according to the report.

Ricardo Florence, vice-president for finance at Marfrig, confirmed the plan, saying: “[The plant] is part of the strategy of our business units. The Middle East is one of our expansion targets. We have several clients there and sales are growing a lot.​”

According to a Marfrig presentation given to investors last year, Keystone supplied 37,000 tonnes of beef and chicken to its customers in the Middle East. The presentation also said it was looking for new customers among local firms.

Seeking local partner

Florence said the location of the new plant is not yet final, but it will probably be Saudi Arabia. He added that Marfrig would be working with a local partner to build the factory.

Typically, in other joint ventures, our partners have been major local poultry companies, and we cater to the processing end of the business​,” said Florence.

He added that any local production in the Middle East would most likely be in addition to, rather than a replacement for, existing imports, explaining Marfrig preferred to maintain both local production and exports for markets where it operated facilities.

Current Marfrig imports to the Middle East come from a wide range of sources, said Florence: “Poultry and processed items mostly come from Asia. The beef comes from Brazil, Uruguay and Argentina​.”

He also said the company was unaffected by the wide embargo on Brazilian beef in GCC countries, as it supplied beef from its Argentinian and Uruguayan plants for affected markets.

Strong regional growth

Marfrig credits strong exports to the Middle East for part of its 14% year-on-year revenue growth in Asia in Q1, according to its earnings report. Florence said the UAE, Lebanon, Jordan, Saudi Arabia and Egypt are among the company's top 20 target markets for exports.

Keystone is a major supplier of beef and chicken to a number of fast-food chains, including McDonald's and KFC. Keystone founder Herb Lotman, who died last month, is credited with creating the Chicken McNugget. 

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