The opening by Shanghai Totole Food, backed by Nestle, the world's largest food group, of a new factory in Shanghai over the weekend has doubled its production capacity which will help it maintain the market leader position in China.

Switzerland-based Nestle, which holds 80 percent in Totole, invested 320 million yuan (US$47 million) to set up the plant which has a registered capital of US$9 million.

The 66,604-square-meter plant in Jiading District has an estimated output of 100,000 tons of granulated chicken bouillon with its eight production lines, boosting Totole's overall annual capacity to 180,000 tons and helping it become the world's largest chicken bouillon producer.

"Despite the breakout of bird flu and the financial crisis last year, we persisted in building the factory, reflecting our firm confidence in the domestic market," said Rong Yaozhong, founder and general manager of Shanghai Totole Food.

Rong said the consumption of chicken bouillon was about 200,000 tons in the country, far below 1.5 million tons consumption of MSG (monosodium glutamate).

Market potential

"The huge market potential prompted us to establish the new plant to meet future market demands," said Rong. "Although we expect a slower growth rate this year, sales are set to continue to increase year on year."

Totole has 48 percent of China's chicken bouillon market and the company's annual sales totaled more than 2 billion yuan, it said without giving the time period.

The company plans to launch diversified brands and products to cover all market segments to cement its No. 1 position.

"We are pleased to see Totole grow by as much as 50 percent annually," said Patrice Bula, chief executive of Nestle for China.

(Shanghai Daily September 7, 2009)