The new business, based in Tianjin's Wu Qing Industrial Development Zone, is expected to make annual sales of RMB1 billion (€97.5m) in five years, said Super Coffeemix in a statement to the Singapore stock exchange yesterday.
Sales of snacks in China reached RMB25.2 billion in 2005, according to market research firm Euromonitor, and the market is expected to grow to RMB36.1 billion by 2010 as urban consumers buy more convenient, on-the-go foods.
The new business will benefit from Super Coffeemix's manufacturing know-how in combination with China Lifestyle's LaBiXiaoXin brand, number two in the jelly desserts market, and its distribution network across 30 provinces.
The venture's first product, to launch in the second half of 2007, will be potato chips, sold under the LaBiXiaoXin brand.
Potato chips are increasingly consumed by the younger generation keen to try western foods, and the extruded snacks and chips category, which reported sales of RMB11.1 billion in 2005, is forecast by Euromonitor to grow by more than 8 per cent annually.
Tianjin Super Lifestyle Food Development Company could also produce cup noodles, instant porridge and mashed potatoes, said Super Coffeemix.
The Singaporean firm, market leader for 3-in-1 instant coffees in south-east Asia, will have a 50 per cent stake in the business while China Lifestyle and Chance Cove (owned by China Lifestyle director Zheng Yu Long) will take 32 per cent and 18 per cent stakes respectively.
The venture has initial capital of US$5 million to cover machinery costs and three production lines with an annual capacity of 4,000 tonnes.
Super Coffeemix, which already makes instant beverages and convenience foods in Singapore, Malaysia, Myanmar and Indonesia, also has a stake in Wuxi VV Super Coffee Company, a joint venture with Xuzhou VV Cereal Company.
Last week it said it would add an extra US$576,505 to its previous investment in this firm of US$6.29 million.
It also has a joint venture with China's Tee Yih Jia Food to make vinegar, sauces and condiments.
