CP keeps pace in rice market

       CP International Trading Business Group, a unit of Charoen Pokphand Group, has beefed up its rice business to cash in on growing local packed rice sales and cope with mounting market competition from new players.
       The group will start operation next March on its new rice processing plant in Ayutthaya province, which it calls the most advanced rice facility in Asia,built for more than one billion baht.
       The new plant will add another 1.08 million tonnes of milled rice and bring the company's rice production capacity to nearly two million tonnes a year,said Prasit Damrongchietanon, CEO of CP Intertrade.
       The plant was part of a 3.5-billionbaht project that also includes a river port, inland container depot and a new head office for CP Intertrade in the same compound.
       The additional volume should help the company enlarge its market share in packed rice sales and improve export volume from 500,000 tonnes in 2008.
       "We sold about 500,000 tonnes of rice locally last year through modern trade [stores]. The volume ranked us as market leader even though it only accounted for a 6% share of rice distributed via this channel," he said.
       CP Intertrade also exported about 500,000 tonnes last year and the rice business was a main contributor to the company's 22 billion baht in revenue last year.
       Based on figures from the Thai Rice Packers Association, local rice consumption is estimated at 8-9 million tonnes a year, with most sold in traditional markets and nearly one million tonnes sold through modern trade stores.
       The association estimated the value of the packed rice market at about 20 billion baht a year, but expects it to rise substantially following rapid urbanisation. High margins on bagged rice have lured new players to enter the market in recent years despite the presence of more than 100 packers.
       Boonrawd Brewery Group is reportedly teaming up with one of the country's largest rice traders and exporters, Asia Golden Rice Co. If the venture materialises, the strong distribution network of Singha beer could create a serious contender.
       Mr Prasit shrugged off the possible entry of Boonrawd.
       "The packed rice market is still very virgin and can grow further, considering only 800,000 to 900,000 tonnes compete in modern trade stores," he said.
       Consumers will consider product quality and brands more in the future,and they will require a product that is traceable, he added.
       In order to remain the market leader,CP Intertrade earmarked 150 million baht for marketing this year to promote rice sales under the Royal Umbrella brand.