Chinese food group Zhongpin is to enter the premium food oil business with the construction of a US$5.6m facility.

The new business line to be produced at the facility is designed to further enhance the brand identity of Zhongpin, the company said today (24 August).

The meat processor wants to broaden its product lines and core competencies, increase capacity utilisation and profitability, and reduce waste.

“In addition to increasing our brand identity, core competencies, product lines, and production capabilities, this expansion has two other benefits,” said Xianfu Zhu, chairman and CEO.

“First is the expected increase in our return on investment, which is one of our primary financial goals. And second is further effective utilisation of the raw materials we consume in our pork and pork processing production, since premium food oils will be co-products from our current processing.”

The plant will be located in the Zhongpin Food Industrial Park in Changge, Henan province.

The facility will have an initial annual capacity of 20,000 metric tons for premium quality food oils. Construction is planned to begin in September and is expected to be operating in the second quarter 2010.

The company’s premium food oils will be sold through Zhongpin’s existing sales channels to both wholesale and retail customers. Individual consumers will also be able to buy the food oils in Zhongpin’s retail stores and in network stores that carry the Zhongpin line of branded food products.