Fast-food firms seek Thai chicken processors

Global fast-food chains, particularly Tricon and McDonald's, are turning more to Thai processed chicken supplies, due to problems related to bird flu in other producing countries.

Improved quality and competitive prices of Thai chicken have also contributed to a surge in orders for chicken processors, especially Charoen Pokphand Foods, the listed flagship of the agro-industry giant Charoen Pokphand Group.

Tricon International, the owner of the KFC and Pizza Hut brands, among others, plans to increase its purchases of chicken meat from CPF by 20 per cent this year to a five-year record of Baht 3.5 billion (€9million).

McDonald's Asian operation also expects to increase its purchasing volume of Thai chicken by 15 to 20 per cent. McDonald's Japanese network is turning to Thai products to replace American chicken, which encountered problems related to bird flu.

In addition to processed and frozen chicken, western fast-food restaurant chains are relying more on products from Thailand, including shrimps, chilli sauce.

Pisit Ohmpornnuwat, managing director of C.P. Merchandising Co, a subsidiary of CPF, said the additional orders for chicken this year were from Tricon in the United Kingdom and some countries in the Middle East, including Jordan, Saudi Arabia and Kuwait.

An industry source said that previously, Tricon in the UK ordered chicken from another Thai manufacturer. The order was cancelled after one shipment from that firm was rejected by Dutch health authorities after excessive amounts of nitrofuran, a potential carcinogen, were found. Tricon then moved to CPF.

However, it is believed the rejection was part of a protectionism policy.

Mr Pisit said that of the total orders worth 3.5 billion baht placed by Tricon this year, about 1.5 billion baht is for KFC's export market while the rest is for its operations in Thailand.

Penchan Poomniyom, communications and strategic planning manager of McThai Co Ltd, the operator of McDonald's in Thailand, said that because of the problems associated with bird flu in US chicken, McDonald's was forced to stop the distribution of McNuggets made with American chicken in Japan for two days.

However, McDonald's Japan has ordered ``contingent'' supplies from Thailand to replace the supplier in the US.

This showed that the potential and product quality of Thai manufacturers were recognised as world-class, said Mrs Penchan, adding that the company planned to encourage other firms in Japan to order more products from Thailand.

It is expected that the chicken orders from Thailand will reach 4,000 tonnes this year, as McThai is expected to open seven new restaurants this year. Last year, it had about 93 outlets.

Panithan Sethabutra, managing director for Thailand and Indochina of Tricon Restaurants (Thailand) Co, said local KFC sales growth in the first five months of this year reached the 8 to 9 per cent target, about the same as last year.

The increase was due to its promotional campaigns, expansion by six new outlets in the first five months, and new menu items.

This year, 35 new KFC outlets will be opened, of which 20 will be operated by Tricon and the rest by franchisee Central Fast Food.

Mr Panithan expected its home delivery business during the World Cup tournament to increase KFC and Pizza Hut orders by 30 to 40 per cent.Teerasak Urunanon, executive director of CPF, said the company was looking to expand its chicken business in Thailand by creating its own brand and distributing it through modern outlets.