Yonghong Food seeks to expand with PE backing
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Beef jerky on sale during the 2013 Guangzhou Food Expo on May 10. Provided to China Daily |
He added the company will carry out different promotion activities and launch advertisements based on different lifestyles.
In addition, besides traditional distribution channels like supermarkets, e-commerce websites such as 360buy.com and Dangdang.com will be more commonly used.
Yi said that beef jerky has many advantages compared with other snacks. For instance, its target consumer group is large because people aged between eight and 48 can eat it. Also, the product is easy to store and doesn't need preservatives.
"The beef jerky sector has a low policy risk and few strong competitors," said Yi, adding that they are also considering merger and acquisition opportunities in other sectors of the leisure food sector, such as melon seeds.
Besides Yonghong's Bull Head brand, the other famous brand in the sector in China is made by Mother of Yang Shengtang Co Ltd.
"Yonghong Food's annual sales are now about 300 million yuan, and we plan to make it 3 billion yuan in five years," said Yi.
Yi has visited about 80 countries around the world and has accumulated lots of sales experience in places such as Pakistan, Afghanistan and the Middle East.
"Beef jerky is a Muslim Halal food, so we are considering selling it to Islamic countries," said Yi, adding that they will step up promotion efforts in countries including Iran, Iraq, Indonesia, Tajikistan and Uzbekistan.
Yi said that the company will be cautious to guarantee that its business runs smoothly in new markets.
"We're not satisfied with owning a brand in one country, both Lunar Capital and I are aggressive and we want to achieve something," said Yi.
Consumption-related companies have recently attracted attention from many private equity investors. According to the ChinaVenture Group, there were 29 private equity deals made in the consumption and service sector in the first half of this year and their value totaled $553.74 million. In 2012, 72 deals worth $2.28 billion were made.
David Liu, a partner at KKR and chief executive officer of KKR Greater China, told China Daily earlier that they are long-term investors in China.
"We believe that over time, the restructuring of the Chinese economy and continuing urbanization will lead to an increase in domestic consumption, which will in turn generate attractive investment opportunities," said Liu.
Wang Chaoyong, chairman and chief executive officer of China Equity Group Inc, a Chinese private equity firm, said the firm had amassed a fairly diversified portfolio to prepare for the era when consumers become the pillar of China's economy.
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