INTERVIEW-DaChan Food sees China hungry for chicken

BEIJING, Oct 30 - DaChan Food (Asia) Ltd <3999.HK>, China's largest chicken meat processor, expects China's consumption of white-feather chicken to soar in coming years amid the country's rapid economic growth.

"The mainland's consumption will soon catch up with Taiwan's. That means the size of the chicken market could more than double," said company chairman Mark Han in an interview.

White-feather chickens, which account for around half of China's annual 11 million tonnes of chicken consumption, are mainly bred in northern China, while yellow-feathered chickens, bred in the south, are used mainly to make soup.

"We expect consumption of chicken meat to grow faster than consumption of any other meat."

Per capita consumption in mainland China, which shares the same dining culture as Taiwan, is between 6-8 kg, one third of the 18 kg consumed by the average Taiwanese, he said.

People in China, already the world's largest pork consumer, take pork as a staple, but chicken meat, which is cheaper than pork, has picked up in the past few years, particularly after the rapid expasion in outlets of fast food chains such as Kentucky Fried Chicken.

DaChan is the also the largest chicken meat supplier to international fast food chains such as KFC, supplying one out of three fried chickens produced by the company, said Han.

Taiwan-based DaChan will expand its food production chain from chicken breeding and animal feed to slaughter houses and hopes to set up additional 40 production bases in the next five to 10 years.

The company's competitors include the largest chicken breeder, New Hope Group, and Thailand-based Chia Tai Group.

"Next year, we expect our business to grow at 15 percent and the same pace is likely in the long term," said Han.

The company sells mainly around Beijing and Shanghai and the port city of Dalian in the northeast.

"Processed meat products will be our major focus, and could make up 20 percent of our gross margin within the next three years," said Han.

Turnover from its processed food business grew by 23.7 percent year on year in the first nine months, compared with a 10.7 percent fall in total sales of $878.8 million in the same period.