Australian fruit and vegetable processing company The Food Revolution Group (ASX: FOD) will upgrade its Mill Park processing facility in Victoria following increasing demand from one of the world’s largest consumer markets.
The company will add a state-of-the-art clean room with laboratory and powder mix area – over 1,260 square metres of new workspace to enable greater production capacity and to meet an anticipated sales growth into China.
The upgrade will also allow for the introduction of new high-end, high-margin, high-volume products such as fish proteins and functional health and beauty aids, which will also be sold to Chinese customers.
A line-up of new equipment including gel and liquid sachet machines and powder sachet machines will be installed to manufacture the products, which will be distributed via Food Revolution Group’s key partners and through an extensive sales network operated by Careline.
Careline is an Australian manufacturer and exporter of skincare products, supplements and baby formulations into Asia, and was founded by The Food Revolution Group chairman and major shareholder Dr Norman Li.
Dr Li holds significant distribution capabilities across China and has been incentivised to grow Group sales to $100 million per annum in the short-term and $500 million per annum within five years.
He said the plant upgrade is an opportunity for The Food Revolution Group to rapidly scale its business in line with expected improvements in efficiency and financial metrics.
“This upgrade will increase the capacity of our plant multiple times in terms of potential revenue generation,” he said.
“It follows strong interest in our products by Chinese customers, and we anticipate further distribution deals in the near term as we continue to build our brand presence across China.”
The upgrade is slated for completion by mid-year, with new product sales commencing shortly after.
The plant upgrade announcement follows a recent distribution deal signed between Food Revolution Group and the world’s largest oil refining, gas and petrochemical conglomerate China Petroleum and Chemical Corporation (Sinopec).
The deal enabled Sinopec to distribute Australia Garden canola oil across its network of more than 35,000 petrol and convenience outlets.
A separate distribution agreement signed with JJ Global Fine Foods in November will allow that company to supply Food Revolution Group’s Fruit Farm orange juice throughout mainland China and across high-end hotel chains.
JJ Global and Food Revolution Group expect distribution volumes will grow approximately 50% on a year-on-year basis.
At midday, shares in The Food Revolution Group were trading 3.33% higher at $0.155.