Thai Union Group is eyeing a move into the shrimp sector in Indonesia via the feed business, according to analysts following the company.
During an analysts meeting after the company’s second quarter results, Thai Union reportedly said it has been looking at getting into the shrimp sector in the country, which has not been impacted by early mortality syndrome (EMS), unlike Thailand.
“So, they will enter into Indonesia with shrimp feed and then processing later. But, no timeline was provided,” said the analyst. “It sounds like a greenfield given that the management suggested a shortage of shrimp processing capacity in Indonesia,” he added.
“We have learned a lot from our partnership in India, and we look forward to applying those learnings in other markets,” said a Thai Union spokesperson.
Expanding first into a new country with the feed business is the same way Thai Union has got into India. First, the company invested in Avanti Feeds, an Indian shrimp feed producer. In 2012, Thai Union increased its stake in the Indian feed processor from 15% to 25.12%. Then, Thai Union has established a processing joint venture with the Indian firm.
In an interview in May, Rittirong Boonmechote, who run’s Thai Union’s global shrimp business told that Indonesia, Bangladesh and Myanmar are all countries the company is “studying” for possible deals.
All three countries have raw material that fits Thai Union’s profile. Indonesia is a big producer of vannamei and black tiger shrimp, with Bangladesh also a producer of black tiger. Myanmar is seen as possible country in which to develop shrimp farming and processing.
“Indonesia is interesting, but Bangladesh is more difficult. After study, we may invest, or not,” he said. “It is maybe too early for Bangladesh, now. But, it is also a big market for freshwater fish. They have big consumption, with a 160m population.”
Myanmar is also “very interesting for us”, he said. “We are studying. Maybe it is too early to invest, we need some clearer picture about the new government policy.”
For Boonmechote, the EMS crisis in the Thai shrimp sector was a harsh lesson, he said in a previous interview. The diversification to production in India and also the desire to look at deals in other producing countries, such as Indonesia and Bangladesh is a part of risk management strategy of the company.
Source: Undercurrent
