Food Processors Take up a Prominent Role in the Modern World

Food Processors Take up a Prominent Role in the Modern World

PR Newswire

NEW YORK, March 26, 2020

FinancialBuzz.com News Commentary

NEW YORK, March 26, 2020 /PRNewswire/ -- The food processing and handling sector provides the equipment and solutions to produce, process, and distribute food to billions of households around the world. It also services a uniquely diverse value chain, ranging from farming to logistics. In recent years, the sector has become increasingly important as the world's population has grown and higher incomes cause a shift in preferences. In fact, the stable expansion in emerging markets, urbanization, and rising living standards are all triggering a dietary shift to higher-value-added products, fueling demand for processed and packaged food and leading to higher equipment sales. As explained in a research report published by McKinsey & Company, emerging markets are driving most of this growth, with Asia expected to contribute about half of global growth between 2017 and 2021. The changing consumer preferences will specifically help boost organic and healthier food markets and food safety regulation will lead to product & menu expansion, higher standards, and a more intense focus on traceability. Additionally, the food processing market is expected to reach an estimated USD 4.1 Trillion by 2024 with a CAGR of 4.3% from 2019 to 2024, according to data published by Research and Markets. China Xiangtai Food Co., Ltd. (NASDAQ: PLIN), Archer-Daniels-Midland Company (NYSE: ADM), Sanderson Farms, Inc. (NASDAQ: SAFM), Mondelez International, Inc. (NASDAQ: MDLZ), Conagra Brands, Inc. (NYSE: CAG)

Demand for organic food, in particular, is growing fast, and the segment already has a high penetration in Europe and North America. Currently, the highest organic market share globally is in Denmark, where it accounts for 8.4% of total sales, according to McKinsey. Food companies have started reformulating products to meet the new organic standards. And factors driving the rising demand for organic products include increasing government support for organic agriculture, expansion of organic products beyond the natural channel, and the increasing popularity of organic foods in restaurants. Another segment that is growing rapidly is meat and dairy; the market value of processed meat is expected to cross the trillion-dollar mark by 2024, which is a phenomenal increase from its 2019 valuation of USD 587.15 Billion, according to data provided by Market Data Forecast. And, as the demand for meat rises worldwide, so must the production of meat. In fact, most of the world's meat is produced in Asia, which generated 140 million metric tons of meat in 2016.

China Xiangtai Food Co., Ltd. (NASDAQ: PLIN) just announced breaking news that, "through its subsidiary Chongqing Jinghuangtai Enterprise Management Consulting Co., Ltd., entered into a non-binding Memorandum of Understanding (the "MOU") to acquire 51% controlling interest in Chongqing Ji Mao Cang Feed Co., Ltd.("JMC"), a private enterprise specializing in feed raw material sales and providing feed formula solutions, to expand the southwest market in China.

Pursuant to the MOU signed on March 23, 2020, PLIN proposed to acquire 51% controlling interest of JMC, one of the leading feed sales companies in southwest China. JMC has more than 200 customers in farm industry and nearly 100 customers in feed production industry. In 2019, JMC sold more than 200,000 tons of soybean meal, exceeding RMB 500 million (approximately $70,000 USD) in sales. Given the Company's revenue of fiscal year 2019 was $102,545,152USD, PLIN is expected to increase 70% of revenue through this acquisition.

Ms. Jiaping Zhou, General Manager of JMC, commented, 'We are pleased to have an opportunity to start a partnership with a Nasdaq listed company, and it is regarded as an essential milestone in JMC's history. JMC stands to benefit greatly from PLIN's senior experience and resources in the food industry, and values PLIN's continued involvement as we look to further expand JMC's profitability with the development of production capability and enhancements to our distribution channels.'

Ms. Zeshu Dai, Chairwoman and CEO of China Xiangtai Food, commented, 'We are enthusiastic about partnering with JMC to continue accelerating the growth of the Company. This move is in line with our growing strategy of solidifying our industry position by gaining additional market share and expanding our product portfolio. With JMC's capability in feed raw material and formula solutions, we can improve our industrial chain and our competitiveness to position well for the expansion.'…"

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Archer-Daniels-Midland Company (NYSE: ADM) announced last month that it is expanding the production of non-GMO soy protein concentrate at its facility in Europoort, Netherlands. The Europoort facility recently started producing non-GMO soy protein concentrate, which is available as a powder and will be suitable for all types of food applications. With ADM's comprehensive ingredient pantry and unparalleled expertise, ADM can provide customers not only with soy protein as a standalone ingredient but can also help incorporate it into tailored nutrition solutions to satisfy growing market and consumer trends. This production expansion adds to ADM's vast plant-based protein ingredient portfolio, which combined with ADM's extensive expertise in systems, flavors and application development, helps give customers an edge in creating the latest food and beverage product innovations.  

Sanderson Farms, Inc. (NASDAQ: SAFM) is an integrated poultry processing company, produces, processes, markets, and distributes fresh, frozen, and prepared chicken products in the United States. Back in December, reported results for the fourth quarter and fiscal year ended October 31, 2019. "The fourth quarter marked the end of the second fiscal year in a row during which market prices for boneless breast meat produced at our plants that process a larger bird for food service customers fell to historically low levels after Labor Day," said Joe F. Sanderson, Jr., chairman and chief executive officer of Sanderson Farms, Inc. "Similar to fiscal 2018, market conditions weakened significantly during our fourth fiscal quarter of 2019. Despite weakness during our fourth fiscal quarter, overall market prices for poultry moved counter-cyclically higher during November and December, and several factors are expected to support higher market prices for poultry meat as we move into the new calendar year."

Mondelez International, Inc. (NASDAQ: MDLZ) announced earlier last month an agreement to acquire a significant majority interest in Give & Go, a North American leader in fully-finished sweet baked goods and owners of the famous "two-bite"® brand and the "Create-A-Treat"® brand known for cookie and gingerbread house decorating kits. Give & Go is being sold by funds affiliated with Thomas H. Lee Partners, L.P. (THL). "Our ambition is to lead the future of snacking by offering consumers a broad range of snacks in key growth channels and categories," said Glen Walter, Executive Vice President and President, North America, for Mondelēz International. "Give & Go's leading position in the large and fast-growing in-store bakery channel gives us a unique opportunity to expand into new, on-trend consumer spaces. Similar to our recent acquisitions of Perfect Snacks and Tate's Bake Shop, this is yet another great example of our bolt-on acquisition strategy to establish foundations in faster growing snacking adjacencies. We look forward to working with Joel Flatt and the entire Give & Go management team to build upon their strong success."

Conagra Brands, Inc. (NYSE: CAG) announced last year dozens of new product launches across the four domains in which its iconic and emerging brands compete: Frozen & Refrigerated Meals, Snacks & Sweet Treats, Condiments & Enhancers, and Shelf Stable Meals & Sides. Following is a selection of some of the company's product highlights include the Slim Jim Giant Multipack comes from the No. 1 brand in meat snacks, with each box containing six giant size sticks. Available in Original and Mild flavors with over six feet of meat in one box. And the Pub Pies: An elevated take on the traditional pot pie with tender cuts of braised and roasted meat wrapped in a buttery shortbread crust. Flavors include Herb Roasted Chicken and Steak & Ale.

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