Groupe Danone SA will form ventures to make and sell yogurt products in China with the country's largest producer of liquid milk, China Mengniu Dairy Co.
Paris-based Danone, the world's biggest yogurt maker, will hold 49 percent of a joint enterprise, spokeswoman Stephanie Rismont-Wargnier said. Mengniu will own the remainder of the venture, which will own about 20 factories.
Danone Chairman Franck Riboud has said he's optimistic about markets including China, Indonesia and Russia. China's demand for dairy products has more than doubled during the past five years to 25 million tons in 2005, spurred by rising income, increased health awareness and expanding retail chains. "We are accelerating our geographic development,'' Riboud said at a press conference in Paris today. "We will announce other projects in developing countries in the weeks to come.''
Danone shares fell 5 cents to 118.3 euros in Paris, giving the company a value of about 31.2 billion euros. Danone has a very aggressive China strategy. The partnership, while good for Mengniu, may hurt Danone's relationship with its Chinese partner of 15 years, Bright Dairy & Food Co.
In April, Danone agreed to pay 358 million yuan ($44.7 million) to increase its stake in Shanghai-based Bright Dairy to 20.01 percent from 11.55 percent. Bright Dairy has a dominant market share in the Shanghai region and was China's fourth- biggest dairy producer by sales in 2005.
"We are currently in talks with Bright Dairy about the conditions of our partnership,'' Rismont-Wargnier said. She added that the Mengniu agreement had "no immediate impact'' on the two companies' arrangement.
The factories owned jointly with Mengniu are located mostly in northern China and employ about 1,700 people, the spokeswoman said. At least six already produce yogurt.
Danone sees"huge growth potential'' in China, where yogurt consumption is still very low, Rismont-Wargnier said. The Chinese consume only 300 grams of fresh dairy products per capita a year, compared with 21 kilograms consumed annually by every western European, the spokeswoman said.
Danone, the bottler of Evian, also controls Huiyuan Juice Holdings Co., China's largest producer of fruit juices, and Hanzhou Wahaha Beverage Co., which sells mineral water, tea, fruit juices and baby milk in China under the brand Wahaha, which means"laughing child'' in Chinese.
"The cooperation presents an excellent opportunity for both parties to work together in developing and growing the China dairy market,'' Pierre Couderc, president of Danone for Asia-Pacific Region, said in a statement.
Hohhot, Inner-Mongolia-based Mengniu, which competes with rivals such as Inner Mongolia Yili Industrial Group and Bright Dairy, had a 31.7 percent share of China's liquid milk market as of June 30, excluding milk beverages and yogurt.
Mengniu in August 2005 formed a venture with Arla Foods AmbA, Europe's largest dairy farmer, to produce, sell and distribute milk powder in China, Hong Kong and Macau.
"The production of quality yogurt products requires solid technological expertise as well as research and development support,'' Mengniu President Yang Wenjun said. "The strong support from Danone will strengthen the joint ventures' competitiveness.''
Source:佚名