In the last 11 months, Swiss food giant Nestlé has invested over 1 billion yuan to expand its pet food manufacturing in Tianjin, China.
Nestlé recently topped up its over 730 million yuan (US$112 million) investments made in May 2020 with 230 million yuan (US$35.1 million) to support a two-phase improvement to its pet food plant in the Tianjin Economic-Technological Development Area (TEDA).
Phased expansion plan
The first phase aims to ramp up the factory's production of veterinary pet food using high-end prescription grain production facilities. It will be the company's first such plant in China, Oceania and Africa and their fourth in the world, Nestlé said. Aside from prescription pet food, the first phase will also focus on the development and production of premium pet food that will improve on existing recipes and introduce new food options. Production under Phase 1 should start by the end of 2021.
The second phase, happening in the first quarter of 2023, will see the construction of a new pet food canning line that will produce customized high-end wet canned products for the local Chinese pet market. During this time, Nestlé's total investments in TEDA will also be used to improve on the plants' logistics, costs and designs, and to invest in smart storage facilities to reduce carbon emissions at the plants and to acquire additional land for the wet pet food factory.
Nestlé's aggressive facility expansion in Tianjin mirrors the company's long-term commitment and confidence in China where pet ownership has been consistently on the rise for years now. China is Nestlé's second-largest market in the world.
“Over the past seven years, we have achieved high double-digit growth in our pet food business in China and are committed to driving the continuous upgrading of pet food consumption,” said Mirand Chan, head of Nestlé Purina PetCare in Greater China. “The market has shown increasingly strong demand for high-quality pet food in terms of raw materials, nutrition and taste. Our new investments will help to deliver the best products to our consumers.”
International pet food investments increasing in China
Nestlé, however, is not alone in its quest to strengthen its footprint in China. Pet food rival Mars Petcare is also constructing a pet food factory within the TEDA after announcing a US$100 million investment in December 2020. The Mars Tianjin Pet Food Factory will cover about 110,000 square meters and will be capable of an annual output exceeding 250,000 tonnes.
According to Economic Daily China, China in 2020 welcomed 570 new foreign-invested enterprises in Tianjin, with contractual foreign investment reaching US$36.248 billion, a year-on-year increase of 14.7%.
China, now the world's second-largest economy, posted its strongest GDP growth of 18.3% year-on-year in the first quarter of 2021 since it began keeping records in 1992. The growth is attributed to surge in retail sales, industrial production and investments in fixed assets.