Food processing company The Food Revolution Group (ASX: FOD) has expanded its Asian market coverage after announcing that it has secured a distribution contract with JJ Global Fine Foods, a distribution company based in Shanghai, China.
The deal is a follow-up to another potentially cornerstone agreement signed earlier this month, whereby Sinopec agreed to sell Food Revolution’s Australian canola oil products across a network of more than 35,000 petrol and convenience outlets in China.
The ASX-listed company has developed a “cold fill technology” to increase the shelf life of ambient juice allowing the company to send long-life juice utilising freight.
It hopes the innovation will facilitate a pronounced move into the Chinese market and to set the stage for the company to import additional products in the years to come.
Once upon a time in China
According to the terms of the deal, JJ Global has agreed to distribute Food Revolution’s Fruit Farm range of apple and orange juice products through mainland China with potential customers being premium hotel chains and various supermarket outlets.
The company says that it is targeting almost 500 hotels including popular chains such as Marriott, Accor, the 5-star Mandarin Oriental and the Hyatt, but will also target popular supermarkets such as RT-Mart, Walmart and Carrefour.
Assuming Food Revolution obtains approval for its products, the food processing company intends to sell three distinct juice products including orange juice with pulp and pulp-free, and apple juice.
Food Revolution said it expects the first orders to come in “as soon as it receives China Inspection and Quarantine (CIQ) approval” on all its products.
Gradual progress in China
To date, Food Revolution has secured CIQ certification for one of its Fruit Farm orange juice products and has lodged CIQ application for its apple juice, which it expects to see granted “within 10 days”.
In terms of commercial appeal, JJ Global and Food Revolution have said they expect volumes to grow by as much as 50% per year on a year-on-year basis.
“After our MoU with Sinopec, this deal with JJ Global Foods sees us sign another distribution partner in China. The Chinese market is looking for good quality juices and it’s good that we have now secured a contract to supply some of our juice products into a channel in China that is growing fast,” said Norman Li, chairman of The Food Revolution Group.
Mr Li added that “we are a large juice supplier in Australia and this is a first step to becoming a large supplier into China.”
“Food Revolution has been working diligently towards delivering on the company’s strategy of scalable, profitable growth as we target $500 million of sales within 5 years,” said Mr Li.
With further distribution deals expected “in the coming weeks”, Mr Li says that the company’s expansion into China was first kicked off by its successful launch of canola oil and would be further supplemented in the coming months with the launch of further “new and innovative product lines” that will continue to expand the company’s export range.
Today’s distribution deal with JJ Global Fine Foods helped Food Revolution shares add almost 6% to trade at $0.19 by mid-morning.