Thai Union Frozen Products Pcl Business Information, Profile, and History
Mission: Generate steady growth in revenues and net profit. Focus on improving and adding value to products. Build strong business foundat ion with global product presence. Maintain leadership position in sea food industry. Constantly monitor business risks in response to poten tially adverse trading situations. Generate regular returns to shareh olders. Support socially and environmentally beneficial activities. E quip workforce and personnel with necessary professional caliber and expertise in core business.
History of Thai Union Frozen Products Pcl
Thai Union Frozen Products PCL (TUF) is one of the world's leading pr ocessors and producers of canned tuna, notably through its control of the Chicken of the Sea brand, and other canned and frozen fish produ cts. Canned tuna makes up 46 percent of the Bangkok-based company's s ales, and the United States is the group's biggest customer, represen ting 60 percent of the company's revenues. Exports dominate TUF's sal es; more than 92 percent of revenues are produced overseas, including 13 percent from Japan. Frozen shrimp is TUF's other major product gr oup, accounting for 21 percent of sales. The company also produces fr ozen cephalopod and other canned seafood, including canned pet food, for the export market. TUF produces a range of domestic brands as wel l, including the Fisho brand family of products. The company has targ eted China for expansion in the mid-2000s. After establishing its own marketing subsidiaries, TUF acquired a 50 percent stake in local pro ducer Century Union Foods in Shanghai in 2005. TUF is led by founder and Chairman Kraisorn Chansiri and his son, company President Thiraph ong Chansiri. The company has been listed on the Thailand Stock Excha nge since 1994.
Thai Fishmonger in the 1970s
Kraisorn Chansiri had already established himself as a leading fishmo nger in Bangkok by the late 1970s. In 1977, however, Chansiri took a chance and acquired a failing tuna cannery in nearby Samutsakorn. Cha nsiri was soon joined by members of his family, including son Thiraph ong.
The younger Thiraphong traveled to the United States, where he earned an M.B.A. from the University of San Francisco, before returning to Thailand and rejoining the family business. Together the Chansiris in vested in developing technology enabling the processing of smaller fi sh of two kilos and less. In this way the company avoided direct comp etition with larger canneries in the United States and elsewhere, whi ch tended to avoid this category of fish.
The Chansiris built a dedicated processing facility to house the new production process in 1988, at Mahachi, in the province of Slut Sakho n. The family then launched a new company for the cannery business, c alled Thai Union Frozen Foods (TUF).
The Chansiris proved fortunate in their timing. In the late 1980s, th e larger American fish companies began seeking to shift their canning operations overseas, and especially to the lower-wage, developing ma rkets. TUF's ability to process smaller tuna, coupled with the low wa ges in the Thai canning industry, placed the company in a strong comp etitive position. While the company continued to produce for the dome stic market, notably through its own Fishy branded products, the Unit ed States quickly became the company's most important market.
TUF's expansion began in earnest in the early 1990s. In 1992, the com pany made a strategic investment by constructing a new and larger col d-storage facility. The company also sought out strategic partnership s, forming joint ventures with Mitsubishi Corporation and Hagoromo Fo ods corporations. These partnerships enabled the company to step up i ts product development, and especially to redevelop its production fa cilities to meet international standards.
At the same time, TUF began acquiring a number of businesses in Thail and in order to vertically integrate its operations. This effort gave the company operations spanning production of cans and other packagi ng, label printing, and public relations and marketing businesses. Th e company also boosted its range of food offerings, acquiring IFC Int er-Food Co., which distributed pies, and a stake in T-Holding Co., wh ich owned the fast-food chain Calico, specialized in seafood. Another purchase, that of a 51 percent stake in a frozen shrimp packaging bu siness in the south of Thailand, became known as Thai Union Seafood. That operation eventually became TUF's second largest product segment , after tuna canning.
TUF went public in 1994, listing its stock on the Thailand Stock Exch ange. Soon after, Thiraphong Chansiri was appointed as the company's president, then just 30 years old. The younger Chansiri now became de termined to expand the company into one of the world's largest seafoo d specialists. As Chansiri told Asiaweek: "We stick to what we 're good at. We didn't go out and buy hotels, didn't branch out into telecommunications. We are in the seafood business."
The single-mindedness meant that the company's share price lingered b elow the radar as the international investment community sought out o ther, more visible stocks in the high-flying Thai and Asian markets i n the early and mid-1990s. Investors shunned TUF's more conservative approach. "Today it is the right approach, but a few years back we we re the stupidest company in the market, you know," Chansiri told A siaweek. "People asked why we did not borrow and expand."
TUF nearly gave into temptation, arranging a loan for $42 million . Yet in early 1997, Chansiri became concerned over the possibility o f the devaluation of the Thai baht ahead of the looming Asia economic crisis, and did not go through with the loan. The decision to remain debt-free set the company apart when the Thai government went throug h with the devaluation of the baht, and the Thai economy crumbled. As many of the country's debt-laden, overly diversified companies colla psed, TUF emerged as one of Thailand's healthiest businesses. The com pany's long focus on the international market, which accounted for as much as 96 percent of sales, meant that its revenues came in as U.S. dollars, while its costs remained in baht. As Chansiri told Forbe s: "The crisis proved we had the right approach to our business."
Canned Seafood Leader in the 2000s
In the meantime, TUF had continued its program of international expan sion and its strategy of entering into partnerships. In 1996, the com pany moved into the U.S. canning market, forming Thai Union Internati onal Inc., which then formed a joint, $12 million purchase of Pan Pacific Fisheries. The following year, at the height of the Thai cur rency crisis, TUF's solid financial position enabled it to form a new joint venture, Tri-Union Seafoods, together with the Gann Family Tru st, led by Edmund Gann, a noted tuna boat operator, and Tri-Marine In ternational, a top raw tuna trader. Through that partnership, TUF acq uired a 50 percent stake in another important U.S. seafood company, V an Camp Seafoods, owner of the Chicken of the Sea brand. For just 6;23 million, TUF now found itself among the leaders in the U.S. and international canned seafood markets.
Van Camp was founded in 1914 when the father-and-son team of Frank an d Gilbert Van Camp purchased the California Tuna Canning Company, and then became the first in the United States to pack yellowfin tuna. B y the 1930s, Van Camp had launched its own tuna fishing operations. T he early 1950s, however, marked the company's breakthrough--the launc h of the Chicken of the Sea brand. By 1956, Van Camp had opened canne ries in San Diego and Terminal Island in California, and in Puerto Ri co and American Samoa. In the 1960s, Van Camp became part of the Rals ton Purina foods group. Acquired by an Indonesian company in 1988, Va n Camp soon became majority owned by Prudential Life Insurance Compan y.
The Chicken of the Sea brand played a primary role in TUF's new goal of becoming a $1 billion company by 2005. A major step toward mee ting this target came at the end of 2000 when the company paid its pa rtners $38.5 million to buy the remaining 50 percent of the Chick en of the Sea brand. The addition of Chicken of the Sea gave TUF a so lid U.S. base, and ownership of the country's second largest canned t una brand. Under TUF's sole control, Chicken of the Sea immediately b egan its own expansion effort, buying CI Seafoods Inc., which control led the Jonah, Pacific Pearl, and Perla Pacifica brands of canned sea food.
TUF moved to rationalize its growing U.S. operations in 2001. By then , the tuna fishing market had shifted its center to the Western Pacif ic. TUF followed that movement by shutting down its California canner y operations in order to step up production at its American Samoa pla nt. At the same time, TUF made its first effort to expand beyond seaf ood, launching production of canned chicken that year.
Nonetheless, seafood remained TUF's core market, while expansion of i ts international sales continued to play the central role in the comp any's growth strategy. In the United States, TUF profited from the ec onomic slowdown and the depressed climate following the terrorist att acks on September 11, 200l. As Thiraphong Chansiri explained in Th ai Press Reports: "Our tuna business generally becomes flat when the economy is in high-growth mode, as people opt for other foods. Bu t whenever the global economy is in bad shape or grows slowly, our bu siness thrives."
Yet Chansiri himself played the primary role in TUF's growth, leading the company on its continued acquisition program. In 2003, the compa ny moved into second place in the packaged seafood market through its purchase of Empress International, a New York-based importer and dis tributor of frozen shrimp, shellfish, and other seafood.
At the same time, TUF began moves to enter a new market, that of main land China. In 2003, the company set up its first marketing subsidiar ies, in an effort to import its own brands into the Chinese market. W hen that effort failed to take off, however, TUF quickly changed cour se. Instead, in 2005, the company paid $4 million to acquire a 50 percent stake in Century Union (Shanghai) Foods Co. In this way, the company gained greater access to the Chinese market through Century' s FMCG brand family of products.
By then, TUF had achieved its goal of topping the $1 billion mark , with sales of more than THB 40 billion ($1.19 billion) in 2004, and a forecast of more than THB 50 billion ($1.3 billion) by the end of 2005. Under Thirophong Chansiri, TUF had expanded to become o ne of the world's leading canned and frozen seafood companies.
Principal Subsidiaries: Century Union (Shanghai) Foods Co. (Ch ina); Chicken of the Sea International (U.S.A.); Empress Internationa l (U.S.A.); Thai Union Manufacturing Co,; Tri-Union Seafoods LLC (U.S .A.).
Principal Competitors: Antarktika Fishing Co.; Juraslicis A.S. ; Mar Fishing Company Inc.; ENACA; Primlaks Nigeria Ltd.; Maruha Grou p Inc.; Unilever Deutschland GmbH; Mavesa S.A.; Mukorob Fishing Propr ietary Ltd.; Nichirei Corporation; StarKist Foods, Inc.
- Key Dates:
- 1977: Kraisorn Chansiri buys a failing tuna cannery near Bangk ok.
- 1988: Chansiri is joined by his son Thirophong Chansiri, and d evelops technology to process small-sized tuna and opens a new canner y company, Thai Union Frozen Products.
- 1992: The company expands its cold-storage capacity and launch es partnerships with Mitsubishi, Hagoromo Foods, etc.
- 1994: TUF goes public on the Thailand Stock Exchange.
- 1997: TUF acquires 50 percent of Van Camp Seafoods and its Chi cken of the Sea brand in the United States.
- 2000: Full control of the Chicken of the Sea brand is acquired .
- 2001: TUF closes its California cannery and shifts production to American Samoa.
- 2003: The company launches a marketing subsidiary in China; Em press International in the United States is acquired.
- 2005: Century Union (Shanghai) Foods in China is acquired.
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