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Taiwan's evolving frozen food sector shifting up to value added products.

Taiwan's Evolving Frozen Food Sector Shifting Up to Value Added Products

Ongoing transition away from bulk foods not only gives domestic consumers more to choose from, but presents equipment manufacturers with rich market to target.

The evolution of Taiwan's frozen food industry runs a close parallel to the dynamic development of the island's overall economic miracle. Starting with few resources and no industrial infrastructure, Taiwan has enjoyed unprecedented growth over the last three decades.

While all segments of the frozen food business advanced along with the economy, it required a lot of hard work to adapt the complexities of Chinese cooking to freezing technology. And a lot of smart marketing was required to sell once reluctant buyers on the idea that convenience does not have to come at the expense of flavor.

Ben C.I. Wang, managing director of Taipei-headquartered Laurel Enterprises Corp., told Quick Frozen Foods International: "Twenty, or even ten years ago, people here had little confidence in frozens. It was difficult to find such products in stores."

Nowadays his business is expanding at a healthy annual rate of 25% to 30%. And a number of other companies have also enjoyed double digit growth. Laurel was a pioneer in Taiwan, starting out in 1970 with a small assortment of products. Mr. Wang explained: "We began with Chinese food only. It was difficult to find a market. Only two stores sold frozen food, so we looked to restaurants."

Today the company does a 30/70 split between foodservice and retail sales. The mainstay has been Chinese specialities, and Laurel has developed its own machinery to accommodate the intricate processes involved in producing such items as fish dumplings. The proprietary equipment stretches delicate dough to the exact thickness and texture needed to make dumplings. This process, which used to take up to 24 hours to complete manually, is now done in only 30 minutes.

Wang has expanded into frozen food distribution with the advent of Star Food Supplies Corp. The company has computer-controlled inventory systems, so customers can order automatically. All products in the specialty category are carried, not just Laurel brands. Three major distribution centers have been strategically situated to facilitate around-the-clock deliveries by 130 vehicles island-wide. One prime customer is the 7-Eleven chain, which has some 640 units in Taiwan. Trucks leave Star warehouses in the middle of the night to supply the outlets. Restocking capability is 90% per day.

With the relatively recent surge of supermarkets and convenience stores in urban areas, many traditional shopkeepers have altered the appearance of their premises radically to appeal to changing consumer needs. And as shopping habits have evolved along with in-store offerings, frozen items are gaining wider presence. However, producers are still constantly fighting to gain additional space.

Supermarket operators normally give a new product three months to make the grade. If it sells, it stays; if not, it goes. So it is not surprising that various frozen food associations have allocated funds to influence retailers to free up more space.

Meanwhile, conservative Chinese eating habits have changed little when it comes to dining at home. While fast food restaurants from the West have made plenty of headway among the younger, so-called "mo-deng" (modern) generation, their tradition-minded parents are not about to menu such foreign fare at mealtime.

Brian Chao, vice president of Wellroc Enterprises Co. Ltd., told this magazine: "It's mainly people who have Western educations that serve hamburgers or the like in their homes. Pizza sales should expand, though, thanks in part to the presence of Pizza Hut restaurants."

Wellroc is Taiwan's largest importer of meats. While much ends up being exported to Japan, the company also supplies most major international fast food chains in Taiwan. Bulk sales account for the lion's share of business, with some value added products going to the domestic sector.

A number of outfits have turned to value added lines. But as with industrial production in general, many phases of processing are being geared away from labor intensity in favor of technological automation. Volumes can remain high, while products should provide higher margins.

Asia Frozen Food Corp.

Doing some $30 million in sales last year, Asia Frozen Food Corp. is the island's largest packer of frozen vegetables. Everything from broccoli and asparagus to bamboo shoots and pea pods is offered -- most under private labels. Production capacity exceeds 11 tons per hour.

The Japanese market accounts for 86% of revenues, while the USA contributes 11%. Some vegetable blends and ready meals are exported to North America. One example is Shanghai brand Stir-Fry Shrimp and Oriental Vegetables. The 140-calorie, 10-ounce retail item is distributed by Z.B. Industries of San Pedro, California.

The leading product both in terms of volume and value is frozen green soybeans. Eaten in Japan as a popular snack food, plans are to introduce them in the United States as a healthy alternative to high cholesterol snacks (see Asia Frozen Food Corp. Gearing Up Healthy Green Soybean Snack Attack)

The Fengshan-headquartered company has expanded rapidly since its founding in 1976, with two factories on line and a third now under construction. It will be used to boost ready meal output and the production of other value added items. In addition, four overseas plants are also drawn from.

Lin Chang-Chi, president, explained why off-island investments have been made: "By the late 1980s, Taiwan's living standard, labor cost, land cost, and consumer price index had all risen sharply as a result of rapid economic growth. Consequently, we needed to expand our production elsewhere. In 1987, our joint venture in Thailand began producing okra, baby corn, and other items. In 1989 a plant in Xiamen, southern China, began operating. By the end of 1991, two new plants located in northern China also started up."

Leonine Enterprises

Another supplier to fast food outlets and restaurants is Leonine Enterprises Ltd. Lee Wen-Ping, managing director, said his fully computerized company has also expanded into supermarkets and convenience stores. Boasting a strong base in the north of Taiwan, it aims to soon establish a production/distribution center in the south.

Microwave ovens can be found in only 10% of households island-wide, while the rate is 30% to 35% in urban areas. "There are not many microwaves in Taiwan, so people must still prepare and cook food at home from scratch. Most frozen Chinese foods are snacks, dim sum, dumplings and buns," said Hector Yeh of Good Foods Co., Ltd.

He continued, "Taiwan used to be a large exporter of vegetables and fish, but now a large portion of this goes to the domestic market as value added products through retail outlets."

The island's six-year, $300 billion industrial development plan ought to have a positive effect on the frozen food industry, although how much investment will be channeled into the sector is unknown.

Agricultural output has decreased over the past 20 years. Once a major exporter of mushrooms and asparagus, Taiwan now finds it hard to profitably produce for foreign markets. Much farmland has gone the way of building projects and fish farming, while pollution has added to environmental woes.

William Wang of Chen Hsiang Foods Industrial Co. Ltd. expressed dissatisfaction with the situation: "We've lost a sense of importance in the basics of agriculture and feeding the people."

While Taiwan is expected to remain agriculturally self sufficient until the middle of the next century, shortages of certain raw materials make it a target for foreign suppliers. A number of the island's producers told QFFI that the government places too much emphasis on heavy and high-tech industries, while ignoring agriculture. Chen Hsiang has increased production volumes, but profits have slipped. Therefore it is increasingly looking to valued added processing.

Given the rapid change under way in the Taiwanese frozen food industry, major investments in equipment will be made. The transition of high profit products from bulk items demands new technology and know-how. Factories visited by QFFI were immaculate. All were equipped with modern machinery adequate for present production levels. However, most processors talked about future investment in an industry that keeps bounding ahead. With six-day work weeks the norm on a cramped island with 550 people to every square kilometer, frozen food consumption has nowhere to go but up.

Asia Frozen Food Corp. Gearing Up Healthy Green Soybean Snack Attack

Maybe it would help to think of them as "branch beans." That's the literal translation of edamame, the Japanese word for soybeans -- and for the Japanese, they aren't just for processing into cooking oil or for use as "extenders" in hamburger patties that aren't all beef.

Soybeans are popular in Japan as snacks or appetizers, and Japanese communities abroad offer the core of a new market -- as with Asia Frozen Food's Miyako brand distributed in the United States by Mutual Trading Co., Los Angeles. But in both the U.S. and Australia (where Logan Farm is now marketing frozen green soybeans), efforts are under way to establish a broader market through appeals to health concerns.

"The perfect health and diet food," proclaims the back panel of Miyako's package for frozen boiled soybeans in pod. "Great for your body, great to eat," goes package copy for Logan Farms, which points out more specifically: "Natural source of Omega-3, Helps reduce body cholesterol." According to a soybean industry handout, a study is under way at the University of Washington in Walla Walla on the nutritional benefits of soybeans.

"In the Orient, soybeans have been the major source of high quality protein for over two thousand years," said a spokesman for Asia Frozen Food Corp. "The human body reacts in the same way to protein, whether it be protein from soy beans or meat." Soybeans are harvested at the "peak of ripening," parboiled and quick frozen for freshness, the company boasts.

Japanese consumers gobble them up like popcorn or pretzels or nuts -- at sushi bars, high-class and not so high-class restaurants, karaoke bars (those are the kind where customers sing) and at home (especially during summer, when they are washed down with beer). They can also be used as garnishes for salads, with stir-fry vegetables and in side dishes of various kinds. Mutual Trading hopes to reach beyond the ethnic market in the US this year by playing up soybeans as healthy snacks.

PHOTO : An example of the Chinese-style frozen dumpling retail packs produced by Laurel Enterprises Corp. A wide range of fillings are available such as fish, shrimp, meat, and egg.

PHOTO : Breaded meat appetizers in family-size bags are among the items offered by Wellroc Enterprises Co., Ltd.

PHOTO : Produced by Asia Frozen Food Corp. in Taiwan under the Shanghai label, Stir-Fry Shrimp and Oriental Vegetables is being distributed in the USA by Z.B. Industries. Low in calories, the 10-ounce retail pack features farm-raised shrimp, Chinese pea pods, bean sprouts, bamboo shoots, green soybeans, water chestnuts, carrots and mushrooms.

PHOTO : Frozen Pea Stalk Dumplings is among the value added items manufactured by Chen Hsiang Foods.
COPYRIGHT 1992 E.W. Williams Publications, Inc.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes related article
Author:Ferro, Charles
Publication:Quick Frozen Foods International
Article Type:Industry Overview
Date:Jan 1, 1992
Previous Article:Also on exhibition at ANUGA was plenty of high-tech frozen food processing equipment.
Next Article:Consumers educated about frozen food merits during gala festival held at Taiwan University.

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