China Nutrifruit Group Limited to Expand into Fruit and Vegetable Powder Production

DAQING, China, Jan. 28 /PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited (NYSE Amex: CNGL) ("China Nutrifruit" or "the Company"), a leading producer of premium specialty fruit based products in China ("PRC"), today announced the Company's plan to construct a new fruit and vegetable powder manufacturing facility in Daqing, Heilongjiang Province.

The Company plans to acquire land use rights in Daqing to build its new fruit and vegetable powder manufacturing facility with an annual production capacity of 10,000 tons and is expected to begin production in September 2010. The new facility will produce tomato, pumpkin and other popular fruit and vegetable powders that can be used as ingredients in a variety of products, including baby food, ready-to-drink mixes, instant soup mixes, snack foods, and other confectionery items. According to the Company's estimates, average selling price is estimated to be $2,640 (RMB 18,000) per ton with an average gross margin of 45.0%. The Company expects the new line to contribute approximately $13.5 million in revenue for fiscal year 2011.

"Based on our market research, the fruit and vegetable powder segment is a high growth segment that complements our current product lines. We can leverage our supplier relationships along with our network of distributors to sell our new fruit and vegetable powder products. Furthermore, we believe entering this segment provides a more attractive return on investment than our previous plan of acquiring a concentrate pulp production line. We will continue to outsource production of our concentrate pulp products and may seek additional acquisition targets in the concentrate pulp segment in the future," commented Mr. Changjun Yu, Chairman of China Nutrifruit

The total capital investment for the new facility is expected to be $19.1 million (RMB130 million), which includes the acquisition of the land use rights of approximately 40,000 square meters, the construction of the manufacturing facility, and purchase of equipment. The first payment of approximately $1.5 million (RMB 10 million) for the acquisition of land use rights will occur in the second calendar quarter of 2010. The Company expects to finance this investment with proceeds from its recent financing deal in October 2009 and working capital from operations.

Over the last year, China Nutrifruit's research and development team has developed and refined its manufacturing technology for fruit and vegetable powder production, resulting in powders with a longer shelf life, simpler packaging and lower transportation costs than its competitors. This reduces waste and lowers manufacturing costs for end product manufacturers. In addition, China Nutrifruit's fruit and vegetable powders can be combined with other ingredients to improve production efficiency while retaining the original flavor and nutrition of the end products.

"Consumer awareness and demand for natural food products has resulted in increased use of fruit and vegetable powders in place of refined sugars and artificial flavors in the production of food and confectionary products. Our manufacturing technology, strong distribution network and cost benefits set us apart from domestic competitors and allow our Company to establish a strong footprint in this rapidly growing market," concluded Mr. Yu.

About China Nutrifruit Group Limited

Through its subsidiary Daqing Longheda Food Company Limited, China Nutrifruit, is engaged in developing, processing, marketing and distributing a variety of food products processed primarily from premium specialty fruits grown in Northeast China, including golden berry, crab apple, blueberry and raspberry. The Company's processing facility possesses ISO9001 and HACCP series qualifications. Currently, the Company has established an extensive nationwide sales and distribution network through 70 distributors in China. For more information, please visit http://www.chinanutrifruit.com .

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act""). Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, our plan for the construction of new production facility, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results of the Company to differ materially from those anticipated, expressed or implied in the forward-looking statements. The words "believe," "expect," "anticipate," "project," "targets," "optimistic," "intend," "aim," "will" or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those anticipated include risks related to new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China; any statements of belief or intention; any of the factors mentioned in the "Risk Factors" section of our filling, and other risks and uncertainties mentioned in our other reports filed with the Securities and Exchange Commission. The Company assumes no obligation and does not intend to update any forward-looking statements, except as required by law.

    For more information, please contact:

    Company Contact:
     Mr. Colman Cheng, Chief Financial Officer
     China Nutrifruit Group Limited
     Tel:   +852-9039-8111
     Email: [email protected]
     Web:   http://www.chinanutrifruit.com

    Investor Relations Contact:
     Mr. Crocker Coulson, President
     CCG Investor Relations
     Tel:   +1-646-213-1915 (NY office)
     Email: [email protected]
     Web:   http://www.ccgirasia.com

     Elaine Ketchmere, Partner
     Email: [email protected]
     Tel:   +1-310-954-1345 (LA office)

SOURCE China Nutrifruit Group Limited