Etika Pioneers New Uht Aseptic Bottling Plant

EMBARGO TO SEPTEMBER 1 2011 2:30PM
NEWS RELEASE
Etika Pioneers New Uht Aseptic Bottling Plant In Hawkes Bay, New Zealand

- Establishes a New Zealand First State-of-the-Art, UHT Aseptic PET bottling line for milk and 100% juice products

- The plant will be the first in the world to produce UHT Liquid infant formula in a patented teat cap PET bottle

- The bottled milk and juice products will be shelf stable for up to 12 months and do not require refrigeration

- Most of the initial capacity has already been pre sold

- Takes major step forward in the contract manufacture of dairy, juice and water
products for both the local and export markets

NEW ZEALAND – September 1, 2011 – Etika International Holdings Limited (“Etika” or the “Group”), a company listed on the Mainboard of the Singapore Stock Exchange and one of the world’s largest manufacturers and distributors of sweetened condensed milk and a leading regional Food & Beverage group, celebrated the opening of its New Zealand first state-of-the art plant UHT Aseptic PET Bottling plant (the “Plant”) today. This is pioneered by the Group’s majority-owned subsidiary, Etika Dairies NZ Limited (“EDNZ”), a joint venture between Local Hawkes Bay investors and Etika (NZ) Limited.
This marks a major step forward for Etika in the contract manufacture of dairy, juice and water products for both the local and export markets using a world-first technology - UHT Liquid infant formula in a patented teat cap PET bottle.

Etika’s Chairman, Dato’ Jaya Tan, commented, “We are always on the lookout to creatively break new ground, while we progressively and organically grow our businesses. We are very excited about our partnership in EDNZ as this is in line with our strategy of fortifying our core businesses with the long-term goal of increasing our market value.

“We are delighted that a substantial part of the Plant’s initial capacity has been pre-sold. This is highly significant to the Group as we take a major step forward in the contract manufacture of new dairy and beverage products for both the local and export markets.”
EDNZ is managed by one of the Group’s partners in the JV, local businessman, Neil McGarva, who has 27 years’ experience in the New Zealand Food & Beverage industry. Mr McGarva, a former government Food Safety Auditor, established “Pandoro Bakeries”, a National bread manufacturing operation in 1992. Mr McGarva also co-owns the Auckland based pet food co-packer/exporter, known as the “Natural Pet Treat Company”, through which he first began exploring the opportunities for exporting shelf stable pet milk in a bottle.

Compared to conventional UHT packaging in the form of polylaminated cardboard cartons, PET bottles provide significant advantages. PET bottles are easy to open and reseal without leakage. They are also fully recyclable unlike traditional UHT cartons.

On the Aseptic PET Bottling technology, Mr McGarva explained, “The Aseptic cold filling technology allows for the use of lightweight bottles which not only reduce energy consumption but also resources.

The PET bottled products are also shelf stable for up to 12 months, which removes the need for refrigerated distribution and storage. More importantly, its cold filling method results in fresher produce without the need for preservatives. Additionally, the PET bottles also offer much more design flexibility.

The attractive full-body sleeves accorded by such design flexibility could provide far greater consumer appeal.” This is a big advantage in today’s environmentally-conscious world, where reduced carbon footprint and social corporate responsibility are increasingly emphasised and promoted.

The state-of-the-art Plant is expected to enter into commercial production by October 2011. Its principal activity includes the contract manufacturing of UHT dairy products for Etika Group as well as third party labels using the Aseptic PET Bottling technology. Some the key products to be produced in this Plant include flavoured milk drinks, lactose-free milk, soy milk, milk-based energy drinks/liquid meals, ready-to- drink liquid infant formula, 100% fruit juices and standard UHT milk.

The bottles have enhanced gas barrier and UV light barrier properties to ensure long shelf life.

The Plant is located on a 1.65-hectare site at Whakatu Industrial Park, near Hastings which is ideally-suited for bottling operations with existing resource consents, including trade waste discharge rights and tanker access.

Dato’ Kamal Tan, Chief Executive Officer, added, “The Aseptic PET technology emphasises quality and reliability in dairy culture. Combining our expertise in our existing Dairies Division in Malaysia and Nutrition Division in New Zealand together with EDNZ’s network and familiarity within the dairy sector in New Zealand, we believe that we are now ideally poised to effectively pioneer this UHT milk Bottling technology in New Zealand.

“In doing so, we not only expect to reap synergistic benefits from this strategic partnership, we also aim to increase our value-add services to our customers while communicating our tradition of innovation and excellence.

“Also in line with the Group’s expansion programme, we expect this new Plant in New Zealand to cater to both anticipated and existing demand for our dairy products under contract manufacturing arrangements.”

Concluded Dato’ Jaya Tan, “Through this JV, we hope to strengthen our Dairies Division, which is the Group’s key growth driver and defensive business segment, so as to enhance our resilience against the ongoing global financial slowdown.”

About Etika International Holdings Limited

Listed on SGX Catalist (previously known as the SGX-SESDAQ) in 2004, and upgraded to the Mainboard in 2009, Etika International Holdings Limited is one of the world’s largest manufacturers and distributors of sweetened condensed milk and a leading regional Food and Beverage (“F&B”) Group. It also repacks and distributes complementary products such as full cream milk powder, instant coffee powder and tea dust. The Group’s “DAIRY CHAMP” trademark brand has grown to become a well-regarded name and was awarded “Superbrand” status by the Malaysian Superbrands Council for two consecutive years in 2003/2004 and 2004/2005.

Established in 1997, the Group has an extensive distribution network where it sells and distributes directly to wholesalers, dealers, retailers and on-premise business operations. Its products are also distributed through hypermarkets such as Carrefour, Giant, Tesco, and Jaya Jusco (all under in-house brands as well as “DAIRY CHAMP” brand).

Today, the Group’s products can be found in over 60 countries around the world, including ASEAN, East and West Africa, Central and South America, Middle East, and other Asia-Pacific countries. Etika exports products under its “DAIRY CHAMP” trademark, as well as other products manufactured by the Group under OEM arrangements.

To strengthen its position as a leading regional F&B Group, Etika has made acquisitions to expand into four key business segments: Dairies, Frozen Food, Packaging and Others (including Nutrition, Beverages and Instant Noodles).

In March 2009, Etika announced that it had completed the JV terms vide its newly-incorporated subsidiary in New Zealand, Etika Dairies NZ Limited (“EDNZ”), at an initial equity interest of 50.7%. Etika’s equity stake increased to 60.7% in December 2009. This partnership will pioneer the setting up of a UHT Aseptic PET Bottling plant in New Zealand – the first-of-its-kind in the Australasia and the South-East Asian regions.

In September 2009, Etika completed the acquisition of PT Vixon Indonesia, a distributor of consumer products in Indonesia that will serve as the main distributor of Etika Group’s products in particular Dairy Champ. This acquisition was Etika’s first step towards setting a stronger foothold in the Indonesian F&B market.

In April 2010, Etika completed the acquisition of 100% equity interest in Tan Viet Xuan Joint Stock Company (“TVX”). Etika was set to break into the Vietnamese F&B market for the first time. This also solidified the Group’s foray into ready-to-drink UHT liquid milk, following the Group’s joint venture in March 2009.

In June 2010, Etika entered into a conditional sale and purchase agreement for the proposed acquisition of 100% equity interest in Family Bakery Sdn Bhd, Daily Fresh Bakery Sdn Bhd and Hot Bun Food Industries Sdn Bhd for a cash consideration of approximately RM18.7 million. The transaction was completed on 1 October 2010.

On 5 July 2010,

Etika announced that it had entered into a conditional sale and purchase agreement for the acquisition of 100% equity interest in P.T. Sentrafood Indonusa and P.T. Sentraboga Intiselera and for an equity consideration of Rp10,000 and estimated assignment consideration of Rp19.1 billion. On 6 October 2010, Etika completed the acquisition of 70% equity interest in PT. Sentrafood Indonusa (“PTSF”) and PT. Sentraboga Intiselera (“PTSB”) for an aggregate consideration of approximately Rp24.2 billion. Etika was given the option to acquire the balance 30% equity within twelve months for a nominal sum. On 4 July 2011, Etika has completed the acquisition of the remaining 30%.

On 19 July 2010, Etika entered into the sale and purchase agreement for the acquisition of 100% equity interest in Susu Lembu Asli (Johore) Sdn. Bhd. (“SLAJ”) and Susu Lembu Asli Marketing Sdn. Bhd. (“SLAM”) for a cash consideration of RM89.5 million. The transaction was completed on 4 January 2011.

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