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Nutrastar International, Inc. (NUIN) to Expand Organic and Specialty Food Business

|Includes: Nutrastar International Inc. (NUIN)

Today, Nutrastar International, Inc. announced that it will be expanding its organic and specialty food consumer products business over the next 12 -18 months. Based in China, the Company is currently the leading producer and supplier of premium branded consumer products (including commercially cultivated Cordyceps Militaris), functional health beverages and organic and specialty food products.

Looking ahead into the future, the company will expand the capacity of its organic and specialty food business to a total area of approximately 890,000 square meters. This expansion will occur on Nutrastar’s existing production grounds. The planned expansion will consist of hundreds of greenhouses with a projected production capacity in excess of 6.5 million kg annually, comprised of a variety of organic products. Nutrastar will arrange for new distribution channels to accommodate the increased output.

The expansion will require capital expenditures of approximately $11 million, which will be funded from the company’s cash on hand and cash generated from operations. Further, as part of the government’s incentive and financial support, Nutrastar expects to receive a subsidy for a portion of the total cost of the expansion, currently estimated to be between 10% – 15% of the project cost.

Ms. Lianyun Han, CEO and founder of Nutrastar, commented, “For some time now, our efforts have been focused on growing two of our three consumer product businesses – our Cordyceps and beverage lines – which we have done with demonstrated success. Over the next several quarters, in addition to continuing our other expansion plans, we will be ardently focused on growing our third consumer product business – organic & specialty foods, including fresh produce – which we are very excited about. With strong support from the Heilongjiang provincial government and the Daqing city government, we’ll be building numerous greenhouses on our existing property and working alongside experts from Northeast Agricultural University to ensure proper quality control and food safety, and to meet the highest regulatory standards.”

Ms. Han continued, “While the organic food and produce industry in China is quite fragmented and competitive, it is growing rapidly, as concerns about food safety continue to be an issue nationally. As an incentive to growing locally and organically, local governments are providing financial support through subsidies to organic and green producers. With this expansion, we hope to capitalize on this growing market demand and gain share in the organic food and produce industry, further increasing our market position as a leading provider of premium branded consumer products.”

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