Keystone targets Indonesia for new processing facility

Beef Central, 23/10/2013


One of McDonald’s global beef supply chain partners and pattie manufacturers, Keystone Foods, plans to build its first processing facility in Indonesia next year, handling poultry and beef products.

An investor briefing in Brazil on Monday was told that geographic expansion, prioritising Indonesia and the Middle East, was a key part of Keystone's growth plans.

Keystone’s  executive vice president for the Asia/Pacific, Middle East and Africa (APMEA) region, Richard Wong, said the company currently had production facilities in Australia, Malaysia, Thailand, China, Hong Kong and South Korea that serve other APMEA countries.

Keystone planned to build its first further processing facility in Indonesia in 2014, with an operating capacity of up to 10,000 tonnes per year. The new facility, requiring an initial investment of $6 million, would be principally poultry-focussed, but would also process beef products.

The company was near reaching an agreement with a joint venture partner, and expected to be operating within the 2014 year, he said.

As a market with 240 million people, Indonesia was bigger than Brazil and ten times larger than Australia, Mr Wong told the briefing.

Its 45 million middle-class consumers were expected to triple in number by 2030. With the largest Muslim population in the world, Indonesia offered among the best long-term growth potential of any market for Keystone, he said.

Keystone is also considering whether to build its first pattie and processed foods facility in the Middle East. The Middle East region is currently serviced from Keystone’s operations in Malaysia and Thailand, but McDonald's had told the company it wanted a major supplier to establish itself in the region.

The company's Middle Eastern markets featured a combined population of 50 million in 2013, with gross domestic product that has quadrupled since 2001, and has risen 4.6 percent this year alone – three times the global average. McDonald's beef and poultry sales in the region have risen 28pc this year.

While McDonald's accounted for 65pc of Keystone’s global business last year, the company is also trying to grow its business with other customers. That is likely to involve a push for broader coverage of the APMEA region. In spite of McDonald's plan to double its footprint in the next decade, Keystone can absorb that demand, investors were told.

Keystone Foods expects total sales revenue for 2013 of A$2.43 billion, a 10pc increase from 2012.




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