September 11, 2019 / 11:29 AM / 8 days ago

Danish pork producer opens China factory amid huge meat shortage

BEIJING (Reuters) - Top European pork producer Danish Crown [DACRO.UL] opened a plant near Shanghai on Wednesday to produce packaged pork for the area’s affluent consumers.

The company’s first factory in China will turn frozen pork imported from Denmark into packaged, chilled product as well as bacon and sausages.

All products will be sold through Alibaba’s online platforms and offline Hema stores for the first five years, said the company.

The plant is launching as pork prices in the world’s top consumer of the meat hit record levels following an epidemic of African swine fever that has swept through China’s huge hog herd. The disease is not harmful to people but kills almost all pigs infected.

That offers a “window of opportunity” to sell premium, branded pork, chief executive Jais Valeur told Reuters, with local prices rising and growing attention to the source of raw material.

“It helps us because we are in full control of the value chain,” he said.

The company is aiming to sell its products at a 10-15% premium over local goods, he said.

Danish Crown already exports large volumes of pork to China for use by processors and has seen exports rise by about 20% already this year to 240,000 tonnes.

That looks set to rise further, with analysts at Dutch bank Rabobank predicting a 25% fall in China’s pork output in 2019 alone.

“Very, very strong demand” from China is helping to offset sluggish demand in Europe due to high prices and growing interest in plant-based foods, as well as the strong competition from the United States, which is “flooding” markets in Southeast Asia with cheap pork, Valeur said.

The Chinese plant, about 100 kilometers from Shanghai in neighboring Zhejiang province, will produce 14,000 tonnes of packaged pork a year and account for around 10% of the firm’s Chinese exports in value terms, or about 400 million yuan, added Valeur.

Reporting by Dominique Patton; Editing by Mark Potter

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