Baby Milk: Danone Strengthens Ties with China

Danone is taking a new step in its relations with the Middle Kingdom. The Emmanuel Fabre-led group has concluded an alliance in New Zealand with China's Yashili, one of the world's leading infant formula companies, by acquiring a 49% stake in its local subsidiary for NZ$157.6 million (€92.7 million). ). The sale deal was signed a few days ago, finalizing the memorandum of understanding that was signed in June. Yaşeli International explains that it wants this “Strengthening its partnership with Danone” And “Develop greater synergy”. The Chinese company intends to allocate the proceeds from the operation to “Brand development”.

The New Zealand branch of Yashili, owned by Yashili and Mengniu, the controlling shareholder, was established in 2012. The industrial site in Bukenau, in which Yashili and its controlling shareholder, China Mengniu Corporation, the first in China's milk business, invested $220 million, amounting to $220 million. Annual production capacity is 52 thousand tons of infant formula.

Increase export capabilities

Danone Nutricia is then building up its manufacturing capabilities in New Zealand, a strategic platform for serving China with milk. Until 2013, Danone sourced its supplies from local co-operative giant Fonterra. The relationship soured when Fonterra issued a food poisoning warning on its milk, forcing Danone to halt sales to China.

This issue caused a lot of hype but finally died down once it was confirmed that it was a false alarm. Danone filed a lawsuit and demanded $1 billion from Fonterra. In 2014, Danone acquired two companies, Guardians and Sutton, to continue selling Aptamil and Karicare milk in New Zealand and Asia. Two years later, he signed a $19 million contract with New Zealand's Yachili

Since 2014, the French group has already acquired 25% of the entire Yashili Group, listed in Hong Kong and controlled by Mengniu.