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Business

Japan egg producer wants to crack Southeast Asia

TOKYO -- Ise Foods, Japan's largest egg producer, is teaming up with Southeast Asian companies, transferring technology to help stabilize egg prices, balance the supply-demand scales and support local food industries.

In August, a joint venture between Ise Foods and the Akara Group set up a new egg farm in Nakhon Nayok Province, about an hour northeast of Bangkok. At first, 600,000 egg-layers will be raised at the house. Over the medium term, it will rear 1.2 million hens.

Chicks have been arriving since early October. The plan is to start shipping eggs in March. Ise holds a 40% stake in the venture, capitalized at 100 million yen ($960,200). Ise Foods hopes that upgrading farm facilities and improving feed mixes, among other things, will increase Akara's productivity by over 20%.

Integrated manufacturing

With 12 million hens laying 20 million eggs every day, Ise Foods is one of the world's largest egg producers, raking in over 100 billion yen in sales across the group. It operates farms in China and the U.S., where it controls over 60% of the market in six major East Coast states. In other Asian markets, the company had been hesitant to start production through core technology transfers or capital tie-ups.

Japan began using a cold chain to store and transport eggs in the 1960s. At the time, Japan's per capita gross domestic product was around $2,000, about the same as that of Vietnam today.

According to Euromonitor International, a U.K. research outfit, each of Indonesia's 250 million consumers eat an average of 3.5kg of eggs per year. Vietnam's 90 million eaters consume an average of 2.8kg a year.

Vietnam seems to have a lot of room in which to grow when compared to economically much more advanced Japan -- where 120 million people each eat 12.6kg of eggs a year -- and to Singapore -- whose 5.6 million people consume 15.5kg of eggs during the same period.

To quickly expand its network in Southeast Asia, Ise Foods has been joining forces with companies outside its main business field.

In Vietnam, the company agreed to transfer its technology to DTK, a feed and drugs company. Under the deal, DTK will increase the number of egg layers from 100,000 now to 1.2 million. The two are also mulling a joint venture to cooperate in chick raising and egg sales, among other things, hoping to grab a 10% share of Vietnam's egg market over the medium term.

In Indonesia, Ise Foods is in final talks with the Salim Group, an influential conglomerate, over a possible egg project.

In the Philippines, Ise Foods has joined hands with Jollibee Foods, the operator of the country's ubiquitous quick-service restaurants.

Both the Salim Group and Jollibee Foods have ample financing and logistics networks, and will make complementary partners for Ise Foods in terms of production and sourcing.

In Bangladesh, Ise Foods' potential partner is considering launching supermarket operations, according to Ise Foods.

Ise Foods plans to first get those partnership projects in Asia up and running. Then it wants to diversify its operations into other areas, such as feed procurement, refrigerated transport and sales, hoping to spread low-price eggs that are fresh enough to be eaten raw, just like in Japan.

The company currently gets none of its profit from Asia outside Japan, but the goal is to someday reap 60% of its overall profit from the region.

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