China Food Company Opens New Soya Sauce Factory

The opening is the first phase of expansion for China Food, which will increase the Company's condiments production by 50,000 tonnes or 50% of its current capacity.

17 May 2010 --- China Food Company Plc, a leading Chinese manufacturer of cooking and dipping sauces, is pleased to announce that the Company's new soya sauce factory is now open. The formal opening ceremony took place at the new 266,666 square metre facility in Shou Guang City, and was attended by investors, representatives of the London Stock Exchange, the City of London, the British Embassy, as well as the Deputy Mayor of Weifang City, Shandong Province and other government officials on 12 May 2010.

The total investment for the new state-of-the-art soya sauce facility (including land) is approximately RMB330 million (£33 million). The opening is the first phase of expansion for China Food, which will increase the Company's condiments production by 50,000 tonnes or 50% of its current capacity.  It is proposed that in due course there will be two further phases, adding capacity of 50,000 tonnes each.

The Company expects a significant proportion of this additional capacity to be taken up by its existing customer base in Shandong province and the remainder will be utilised to penetrate new geographic markets.  Shandong Province is the Company's largest market currently and is the third highest GDP contributor in China at US$446 billion. Shandong province is also the third most populous province in China with a total population of 94 million. The Company has already made inroads into new territories such as Henan and Hebei provinces, and sees considerable potential for growth in these new markets.  The current focus of the Company's business is in North East China (including Henan, Hebei, Anhui and Jiangsu provinces), with a population of approximately 450 million.

Whilst China Food's market came under considerable pressure during the first half of 2009, this recovered well in late 2009, and market conditions have continued to improve in 2010.  China's emergent middle-class is now providing considerable opportunities for growth in the cooking and dipping sauce business as increased domestic spending drives sales in this fundamental product category.

China Food has also now completed an advanced enhanced food safety audit with an international accreditation body for the ISO 22000.  It endorses CFC's international food safety standards.

John McLean, Non-Executive Chairman of China Food, commented:  "The Chinese soya sauce market is estimated at five million tonnes with an annual growth of at least 10% per annum according to a recent industry report.  The average family in China consumes up to one litre of soya sauce per week; this indicates just how integral the product is to everyday life in China, and therefore the significant market opportunity which the Company is addressing.  We are excited about the increased capacity which the new factory will give us, enabling the Company to penetrate additional geographic markets in the neighbouring provinces of Shandong, and to capitalise on China's significant economic growth.

"The food safety audit further enhances the Company's standing with its customers, and particularly with international supermarket brands trading in China."