Opened by the Danish Minister for Food, Fisheries and Equal Opportunities, Mogens Jensen, the factory is less than 100km from the centre of Shanghai. It has 17,000 square metres of floor space and has been designed to produce up to 14,000 tonnes of fresh and processed products annually.
“The new factory enables us to supply both fresh and processed products derived from Danish livestock to consumers in and around Shanghai. Building a factory to supply just a single city might sound extreme, but there are over 24 million people in Shanghai alone, and over 80 million people live in a radius of 200 kilometres from the factory. This is equivalent to the entire population of Germany,” said Niels Knudsen, director of Danish Crown’s activities in China.
“The factory is the cornerstone of the strategy that aims to establish Danish Crown as a strong brand in China over the next five years. Our goal is for meat from Danish Crown to be the product in stores that Chinese consumers are willing to pay a little extra for, because they are confident that both taste and our food safety are second to none,” said Jais Valeur, CEO of Danish Crown.
Danish Crown said if it successfully establishes itself as a premium brand in China, Danish Crown plans to build similar factories near other Chinese cities within a few years.
The business has successfully exported pork to China for the past 20 years, however more recently, Danish Crown has seen the market move from the traditional ‘wet markets’ to supermarkets and e-commerce over just a few years.
“Positioning Danish Crown as a premium brand in China is a huge undertaking. Yet it is absolutely essential that we succeed. With the cost level we have in Denmark, we have to sell our products at a better price than our European competitors if we are to offer value to our owners – the Danish farmers – in the longer term,” added Valeur.
Danish Crown is currently working with the Alibaba Group, which has both online sales and physical stores. In November 2018, Alibaba secured the right to buy everything Danish Crown produces in the new factory for a five-year period.
“However, the contract with Alibaba is no guarantee of long-term success. So right now we are working closely with Win-Chain – our bridgehead into Alibaba – to pave the way for Danish pork. It will demand targeted marketing, supply security and consistently high quality for consumers to choose products from Danish Crown every time they want to buy pork,” said Valeur.