Zoyi’s premium pork play

Kuo, meanwhile, has reentered the pork space as an investor in his own right, but the strategy is niche market rather than mass market. Zoyi Capital, the PE firm Kuo set up last year after leaving his position as Greater China vice chairman for The Blackstone Group, has acquired a stake in Taiwan Farm Industry (TFI), a leading Taiwanese meat producer. Cracking the mainland market may be a long-term objective, but TFI's immediate focus is Japan, Singapore and Hong Kong.

"It's not so much a matter of the money as who is going to take the company into these markets," says Kuo. "Making products is one thing but building distribution channels in high-end markets is difficult. We know overseas markets, we have local partners there."

Of the course of its 47-year history, TFI has carved out a 20-25% share of Taiwan's branded meat processing industry. Offering a wide range of low and high temperature processed pork products as well as chilled and frozen raw pork products, it occupies a market segment several layers above the mom-and-pop suppliers. The bulk of TFI's $50 million in annual revenues come from the B2B side through long-term relationships with distributors who sell to wholesale customers such as hypermarkets and restaurant chains.

Kuo describes the investment as part succession-planning opportunity and part recognition that professional management can help take the business to the next level. Zoyi is not the majority shareholder but of the three ownership groups - the others are the founding family and the employees - it has the largest stake. The PE firm is understood to have invested more than $10 million, most of which will be put towards the construction of a new factory.

The facility will allow TFI to meet the standards required by its target export markets and also double capacity. The current factory was built 35 years ago and operates at 90-95%, forcing TFI to turn down customers because the demand was more than it could handle.

While the target market is evolving, TFI will remain faithful to the B2B model that has so far served it well. Right now there is no desire to try and replicate WH Group's predominantly B2C model.

"We want to focus on niche markets where there is demand for high-quality products and we can build trust," Kuo adds. "It is difficult to enter China. The distribution channels are not easy to build and advertising and branding costs are high. We are taking a step-by-step approach."

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• Topics
• Expansion
• Consumer
• Greater China
• Zoyi Capital
• China
• Growth capital
• Taiwan (China)
• Consumer