Cocoaland andChinaLifestyle establish JV
CANDY maker Cocoaland Holdings Bhd has tied up with food group China Lifestyle Food and Beverages Group Ltd to tap into the country's massive 1.2 billion population.
This will be Cocoaland's first ever foreign venture where an equal partnership joint venture company, Cocoa Fujian Food Industrial Ltd, will be set up with a US$5 million (RM16.95 million) initial investment.
Cocoaland chairman and director Datuk Azman Mahmood said the joint venture company will set up a production line inFujianand expect it to grow 10 times over the next 5 years.
At 10 production lines, this will translate into total investments of US$50 million (RM169 million), (at US$5 million a factory), of which Cocoaland's portion will be half.
"The Fujian plant is expected to be operational by August this year and the food products are expected to reach China's supermarkets by second half of this year," Azman told reporters after signing the deal with the Chinese company in Kuala Lumpur yesterday.
Cocoaland will manufacture fruit gummies while China Lifestyle will sell the sweets through its 17,000 retail outlets, 300 distributors and 30 provinces under the "Labixiaoxin" brand, the second largest best selling candy inChina.
Azman said full impact of the venture will be reflected in Cocoaland's revenue starting 2006 and the company will reinvest the profit on marketing and promotions in the first year.
TheFujianplant would have a capacity of producing 4,500 tonnes of candies per production line.
China's candy and snacks market is climbing at a cumulated average growth rate of 8.7 per cent between 2000 and 2005 worth RM39 billion renminbi and is still growing. Prospects are great due to the numerous small local brands.
Cocoaland has operations in Rawang, Kepong and Kampar and makes choclolates, hard candy, pastilles, fruit gummy, cookies, wafer rolls, jelly cups, crackers, drinks, preserved and and processed fruits and food.
It churned 2,700 tonnes of products in 2006 under the brand nameLot100, of which 40 per cent are exported to 7 countries.
