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Tönnies Focus: Better Welfare & China Expansion

1 February 2012, at 6:18pm

ANALYSIS - One of the largest pig processing company in Germany, Tönnies, has announced plans to expand in China and at home in Europe, it aims to raise pig welfare standards, writes Jackie Linden, senior editor of ThePigSite.

Last week, the German magazine, WirtschaftsWoche (Economics Weekly), carried at interview with Clemens Tönnies, board chief of Germany's largest pig slaughterhouse, which has an annual turnover of €4.3 billion.

Mr Tönnies highlighted two important issues for the future of his company's business: the need for pig producers at home to improve further the rearing conditions for their animals and its plans for expansion in China. (He also stressed the need for his local football club, Schalke 04 – of which he is chairman – to increase revenue and reduce its debt burden.)

Speaking on the need to raise pig welfare, Mr Tönnies explained that his company has established a new staff position, directly under the board, which is entirely focused on animal welfare. The appointee is responsible for defining the ideal housing conditions for breeding and growing pigs and the company will go to farmers with these specifications, Mr Tönnies explained.

He added that Tönnies has a commitment from all major retail chains that endorses the increased costs associated with these higher standards.

"Then we will all work together to increase the standards", said Mr Tönnies.

The initial aim is to develop the characteristics of a model for the ideal house, a process he expects to take two years and to add around €20 to the cost of producing each pig. This will make pig meat a little more expensive but he says the extra cost is justified by saying that pig meat in Germany is rather too inexpensive.

Expansion in China

Mr Tönnies described his company's intention to undergo massive expansion in China after establishing a joint venture there. He wants to establish a nationwide network of large cutting plants across the country, supplying some of the pork from Germany.

He explained that, with this in mind, the company is already building a new packaging and frozen logistics centre at its headquarters in Rheda.

The aim of Tönnies's involvement in China is to restructure the meat supply chain. Currently, meat is distributed right across the country, mostly unrefrigerated, by moped by middle men. Tönnies wants to make the conditions more hygienic.

For each of the new cutting plants, the Chinese partner is expected to invest the equivalent of €60 to €70 million. Mr Tönnies explained that his company is still in talks with the joint venture partner over the ownership structure.

Appeal lodged over acquisition of Tummel

Finally in the interview, Mr Tönnies confirmed his company's intention to take over Münsterland butcher, Tummel. The Bundeskartellamt (national monopolies authority) halted the acquisition late last year, citing concerns that it would give the company too dominant a market position.

Mr Tönnies commented that his company's lawyers hold the view that this decision was incorrect and an appeal has been lodged at the Higher Regional Court of Düsseldorf.