FDBusiness.com

Danish Crown and Alibaba’s Win-Chain have signed an agreement on weekly deliveries of 250 tonnes of Danish pork from Danish Crown’s new factory in China for five years. The agreement is worth at least €300 million.

Even before the first pork chop based on Danish raw material has been cut and packaged at Danish Crown’s new processing facility in China, the ‘sold-out’ sign is going up. All the capacity at the new plant will be used to supply Win-Chain, Alibaba’s data-driven aggregated global sourcing platform for perishable food.

“It is fantastic for Danish Crown to land such a big contract with Win-Chain and the Alibaba Group. At one fell swoop, our products will be made available on Win-Chain’s digital platforms and also in the Alibaba-owned supermarket chains throughout the Shanghai region,” says Jais Valeur (pictured third from the left), group chief executive of Danish Crown.

Danish Crown has been co-operating closely with the Alibaba Group since the two companies signed an agreement in August 2017 on the sales and marketing of Danish Crown products on Alibaba’s Tmall, the largest B2C platform for international and Chinese brands and retailers. From summer 2019, this co-operation will be extended to embrace a far wider range of products which will all be processed and packed at the Danish Crown factory in Pinghu outside Shanghai.

Danish Crown has successfully exported pork to China for a number of years, but until now, customers have mostly been Chinese distributors and processing companies. However, consumption patterns in China are changing rapidly, and getting closer to the Chinese consumer is one of the cornerstones of Danish Crown’s strategy.

“The Chinese market is evolving very rapidly at the moment, and there are actually three things happening all at once. First, e-commerce is exploding, with consumers buying the products they want online and having them delivered to their front door only a few hours later. In my view, Shanghai now has the world’s most advanced market for e-commerce. Next, instead of buying fresh meat at the so-called ‘wet markets’, consumers have started purchasing retail-packed products in the supermarkets, in exactly the same way that we shop in Denmark. Finally, a growing number of Chinese are eating out, similar to the trend we are seeing in the US and Europe. We are now moving further up in the value chain in China, and I see significant potential in this,” says Jais Valeur.

In the spring, Danish Crown broke the ground for the group’s first processing facility in China. The 17,000-square-metre new facility will be sited less than 100 km from Shanghai. It has been designed to produce 14,000 tonnes of processed products a year, first and foremost for the more than 25 million people living in Shanghai, but also for the rest of the Chinese population, which currently stands at almost 1.4 billion people.