Chacha Food Company Limited (“Chacha”) has been a leading player in China’s sizeable packaged roasted seeds and nuts market since it was founded in 1996. Its main products include sunflower, watermelon and pumpkin seeds, beans, pistachios, walnuts, almonds, and other nut products. The seeds segment has a market share in excess of 50%, and accounts for 70% of Chacha’s sales.
Following management and strategy changes, including the return of a former chairman, we believe that Chacha is well-positioned for further growth. Its superior product quality, nimble organisational structure, strong branding, and deep-rooted distribution channels should support its growth trajectory in a fast-changing snack market.
Recently, we engaged with Chacha to understand its risk-management policies better, and to encourage it to produce a standalone Environmental, Social and Governance (“ESG”) report. During our engagements, we were impressed with Chacha’s daily operations and its efforts to improve its ESG disclosure and business integration.
Chacha has recently released its first ESG report. Within the report, Chacha described its improving processes, including the use of recyclable packaging, water-saving efforts in the manufacturing process, improvements in supply-chain management and resulting client satisfaction scores.
We believe that this additional insight into Chacha will result in MSCI upgrading its ESG rating. We continue to work with Chacha to help improve these non-financial disclosures over time.