Want Want China Holdings Limited (“the Company”) and its subsidiaries (together “the Group”) are principally engaged in the manufacturing and distribution of food and beverages. The Group’s activities are primarily conducted in the People’s Republic of China (“the PRC”), Taiwan, Singapore and Hong Kong, and its products are also sold to South-East Asian countries, the United States and Europe.

The Group’s operations are mainly organised under four business segments, including the manufacturing and sale of:
 

• Dairy products and beverages, including flavoured milk, yogurt drinks, ready-to-drink coffee, juice drinks,carbonated drinks, herbal tea and milk powder;
• Rice crackers, including sugar coated crackers, savoury crackers and fried crackers;
• Snack foods, including candies, popsicles and jellies, ball cakes and beans and nuts; and
• Other products, mainly including wine and other food products.

Over 90% of the Group’s revenue and business activities are conducted in the PRC.

Dairy Products and Beverages Revenue

Revenue of dairy products and beverages grew by 30.6% from US$1,067.4 million in 2010 to

US$1,393.6 million in 2011. Revenue of dairy products and beverages had attained a rapid growth of more than 30% per annum for 7 consecutive years. Revenue of Hot-Kid milk increased by 33.1% to US$1,239.6 million in 2011 as compared with that of the previous year. Revenue of other beverages increased by 70.5% over the previous year, in particular “O Bubble fruit milk” recorded a strong revenue growth of 40.9% driven by increased volume and higher prices.

Dairy Products and Beverages Gross Profit

In response to the cost pressure of raw materials such as milk powder and sugar, we promptly raised the selling prices of dairy products and beverages and improved the product mix which effectively mitigated part of the effect of raw material cost increases. The gross profit margin of dairy products and beverages of 2011 decreased slightly by 1.2 percentage points over that of 2010. In the future, the management will remain vigilant and responsive to the price trends of raw materials so that we can take pro-active measures to minimise the impact of price fluctuation.

On  Tuesday March 6, Reuters noted that its rivals in China also includes the world's largest food company Nestle SA, which is building a 2.5 billion yuan ($396 million) joint venture milk supply centre in northeast China, and French foodmaker Danone SA in terms of dairy products.

Want Want, which was established in Taiwan in 1992 and entered the mainland China market in the same year, said last August that it was setting up a food processing joint venture with Natori Co Ltd and Marubeni Corp. It also entered into a technology licencing agreement with Morinaga Milk Industry Co Ltd last November, aiming to enter China's chilled products market.