Zhongpin entering premium food-oil business

by Bryan Salvage
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CHANGGE, CHINA — Zhongpin Inc. intends to enter the premium food-oil business, which executives said will further enhance the brand identity of Zhongpin, broaden its product lines and core competencies, increase capacity utilization and profitability plus reduce waste. The company is a meat- and food-processing company specializing in pork products, vegetables and fruits in China.

In addition to increasing the company’s brand identity, core competencies, product lines and production capabilities, the expansion has two other benefits, said Xianfu Zhu, chairman and chief executive officer of Zhongpin.

"First is the expected increase in our return on investment, which is one of our primary financial goals," he added. "Second is further effective utilization of the raw materials we consume in our pork and pork processing production, since premium food oils will be co-products from our current processing."

Zhongpin will sell its premium food oils through its existing sales channels to wholesale and retail customers. Wholesalers will include business customers, such as well-known food companies as well as large high-end chain restaurants. Consumers will also be able to buy the new premium food oils in Zhongpin's retail stores and in network stores that carry the Zhongpin line of branded food products.

The new plant, to be located in the Zhongpin Food Industrial Park in Changge, Henan province, will have an initial annual capacity of 20,000 metric tons for premium quality food oils. Construction is planned to begin in September 2009. Executives anticipate the plant to be operating in the second quarter 2010. The total investment in the new project is approximately $5.6 million.

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