Business

BreadTalk Group to form a $3m joint venture with Japanese firm

KOBE: Singapore-listed food and beverage company BreadTalk Group will form a S$3 million joint venture with Japan's largest rice wholesaler Shinmei.

The 115-year-old Kobe-based company, Japan's largest exporter of rice with 30 per cent share, is the parent company of the Genki Sushi chain.

The joint venture, known as the BTG-Shinmei Venture, will be incorporated in Singapore and begin operations next month. The BreadTalk Group holds a 66 per cent stake, while Shinmei owns the remaining 34 per cent, the two companies announced yesterday.

BTG-Shinmei Venture will purchase ingredients and processed foods, including flour, rice, sugar, dairy products and seafood, either from local producers or from Shinmei's group of subsidiaries.

These will then be sold to the BreadTalk Group, which already uses premium Japanese ingredients, including Shinmei rice, but hopes to introduce more items that tap premium Japanese ingredients grown by farmers in rural agricultural regions.

Both companies hope the deal will open doors for them into international markets.

Shinmei president Mitsuo Fujio said the BreadTalk Group's presence in 17 countries in Asia and the Middle East was appealing, while BreadTalk Group chief executive Henry Chu said it hopes to eventually open stores in the tough Japan market.

BreadTalk also hopes to tap Shinmei's presence to expand into the US market, where the Japanese firm opened a production facility in Sacramento, California, in 2015.

Mr Chu said the partnership will allow for better cost efficiencies, with the company targeting a 1 per cent reduction in purchase value, now estimated at S$100 million a year.

"With this trading company, we also have the opportunity to sell to other F&B players, or even other bakeries or restaurants if required. This trading company is not only important because it takes care of our demand, but we also can learn from Shinmei's buying and selling processes."

Shinmei owns businesses dealing with rice and processed foods, vegetables and seafood and is also involved in the logistics business.

The joint venture caps a year of deals for both companies, with BreadTalk joining hands with Song Fa Holdings in July, and Shinmei's Genki Sushi buying a stake in Akindo Sushiro - Japan's market leader in conveyor belt sushi. - THE STRAITS TIMES

BUSINESS & FINANCE