MEMPHIS, Tenn. (AP) — Two new processing and distribution centers built by Riviana Foods Inc. in Memphis was expected to help the company's plans to streamline operations to meet a consumer demand for rice that has increased as the economy has faltered, officials said.
Political leaders are joining Riviana Foods officials Thursday at the opening of a new 400,000-square-foot rice processing, packaging and distribution center. It represents a $67 million investment by Riviana — maker of the Minute, Mahatma, Success, Carolina and Gourmet House brands — and expands the company's existing operations in Memphis.
Shelby County is giving tax breaks to Riviana, which was expected to pump millions into the area economy and add more than 120 jobs.
The opening follows the company's announcement Tuesday that it will build another Memphis plant to produce ready-to-serve, microwaveable rice products under the Minute brand.
They also will include state-of-the-art processing and packaging technology, allowing the company to cut production costs.
Memphis has the world's busiest cargo airport and Riviana's operations would be close to the rice producing state of Arkansas. Both should help the company cut freight and costs, said Bastiaan de Zeeuw, Riviana Foods' president and CEO.
"Memphis is a distribution center and it's very well-located from a logistical point of view to supply all of the United States," de Zeeuw said.
The country's demand for rice has increased over the past few years, as low-carb diets lost momentum and the troubled U.S. economy led consumers to seek inexpensive, yet healthy, options to prepare at home. New rice flavors have hit the market and the emergence of the ready-to-eat, microwaveable product has spurred demand. Rice prices have fallen since spiking in 2008 with other commodities, such as corn.
Revenue from U.S. flour milling — which includes rice milling — has increased 8 percent over the past five years, faster than the overall economy, said Nikoleta Panteva, an analyst with Ibis World. Rice farming produced about $3.1 billion in revenue this year, according to data by Ibis World.
U.S. rice demand faces challenges from producers in India and other parts of Asia, Panteva said. Healthier options such as brown rice, and aromatic rice from Asia, such as basmati and jasmine, also are attracting consumers, de Zeeuw said.
"Unless you change flavors and introduce new varieties, the per capita demand will not increase on its own," Panteva said. "Also, more people are eating at home and turning to rice and other low-cost alternatives."
The Memphis expansion marks a strategy change for Riviana, which claims about 22 percent of the U.S. retail market share. The company is closing a plant in Houston to make way for the new Memphis plants, though its headquarters will remain there.
It took about two years to build the new plant. De Zeeuw says its automated systems, plus its Memphis location, will save Riviana $20 million per year. The company also will add 100 jobs for that plant.
It will make the microwaveable, ready-to-serve rice and help Riviana save money in import duties and ocean freight because it no longer will need to bring those products from overseas.
Another 22 jobs will be added at the ready-to-serve plant, which is expected to be built by mid-2011, with a $9.7 million capital investment from Riviana.
