Dairy producer and distributor KCG Corporation adopts new and greener strategy on the path to profitability

During the first media visit to the KCG Logistics Park, he said that this improvement aligns with KCG's ambitious goal of achieving 10 billion baht in revenue over the next 3-5 years, whilst emphasising excellence in quality, technology-driven growth, and environmental sustainability.

The park officially opened on August 29.

Having invested over 350 million baht in its construction, he pointed out that the new logistics park is believed to be a world-class distribution centre and warehouse, enhancing KCG's competitive edge whilst addressing sustainability concerns through its “From Great to Growth” strategy.

“KCG believes supply chain and inventory management are key drivers of business growth. They are considered one of the company's seven business pillars. The supply chain acts as a bridge between our products and the end consumer, fostering sustainable business growth. Our distribution centres and warehouses serve as crucial links, connecting KCG’s high-quality production with the swift, secure, and quality-preserved delivery of our 50+ brands to customers,” he said.

KCG’s strategic shift is in response to evolving consumer demands that are reshaping modern supply chain practices. The company is adapting to consumer trends that favour diverse, high-quality products, with a focus on excellence and sustainability.

It is also propelled by the rapid advancement of digitalisation and automation in the food industry. The company is investing heavily in technology to manage complex systems efficiently, enhance its competitive edge, and reduce long-term operational costs.

This forward-thinking approach positions KCG as a frontrunner in supply chain innovation within Thailand’s food sector.

Previously, KCG rented several warehouses for its inventories and distributions. However, after experiencing changing trends, the company realised the need to consolidate its warehouses into a single location for improved management.

“This logistics park allows us to save around 50 million baht per year on lease and operating costs. It also enables us to significantly reduce the number of items in our inventory. Meanwhile, if we fully utilise our rooftop solar cells, we will save approximately 10 million baht per year on our electricity bills,” Damrongchai explained.

In the long term, KCG Logistics Park will provide logistics and food distribution, particularly frozen or temperature-controlled foods such as butter, cheese, and ice cream, for others, transforming the park from cost centre to profit centre.

“It will be another source of income for KCG. Additionally, the park will demonstrate our commitment to sustainability. Our robust distribution network, supported by a fleet of over 150 vehicles, allows for same-day deliveries within a 100-kilometre radius. We are committed to environmental sustainability and have set a goal of 30% EV trucks in our fleet over the next three years,” he stated.

“KCG Logistics Park is dedicated to serving as an intermediary in the transportation of KCG products to small-scale operators and better meeting the modern lifestyle needs of today's consumer,” he added.

Danai Galassi, KCG's deputy managing director, said that KCG intends to provide services to other clients at 30% while using the park for the company at 70%, with the goal of eventually changing the ratio to 50:50.

“By minimising costs and enhancing responsiveness to market fluctuations, KCG Logistics Park currently accommodates up to 14,000 pallets, divided into three primary product categories: Dairy Products, Food and Bakery Ingredients (FBI), and Biscuits. Storage is organised into four temperature zones: Ambient; air conditioned, chilled and frozen.”

He added that KCG is a leading provider of comprehensive cold chain logistics solutions. Recognising the need to adapt to market demands, the company has established a strong cold chain supply system to ensure product freshness and minimise losses. KCG has over 66 years of experience and manages over 50 brands and 1,800 SKUs, each of which requires specialised temperature control.

By implementing an automated Warehouse Management System (WMS), Transportation Management System (TMS), and Fulfilment System, KCG can significantly improve the efficiency, accuracy, and speed of product retrieval.

“This technology helps reduce product loss and allows for real-time inventory tracking, minimising human error through investments in technology and innovation," he stated, adding that the development will aid in the acceleration of KCG speed-to-market capabilities.
 

Q2 Highlights and Future Outlook

KCG's latest development also ensured that it will continue to grow strongly this year, solidifying its position as Thailand's leading dairy product manufacturer.

CEO Damrongchai, stated that the company's second-quarter performance demonstrates consistent growth. It generated a total revenue of 1.6889 billion baht, representing an 8.2% increase year on year. Net profit also increased by 86.3% over the same period last year.

“Our dairy product segment continued to dominate the market, generating sales of 1.0226 billion baht, representing 60.6% of our total revenue. Furthermore, our food and bakery ingredients, as well as biscuits, maintained their top-five positions in their respective markets," he said.

Despite challenging market conditions, including a seasonally weak quarter and global geopolitical uncertainties, KCG's performance exceeded industry averages. This success can be attributed to the company's consistent implementation of a seven-dimensional development strategy.

This strategy has driven both domestic and international sales growth, while also improving production efficiency through machinery upgrades and increased capacity utilisation.

“Our efforts to rationalise our product range and introduce innovative products tailored to modern consumer preferences paid off in Q2 2024, resulting in a significant 86.3% increase in profit," he stated.

Looking ahead, the company is optimistic about its prospects. The upcoming launch of the KCG Logistics Park, in addition to existing facilities in Chiang Mai, Khon Kaen and Surat Thani, will enable the company to provide nationwide coverage and deliver products to consumers within 24 hours. This comprehensive network is expected to sustain KCG’s growth trajectory.