December 19, 2007

Danone ends year-old joint venture with Mengniu

French food group Danone announced Tuesday (December 18, 2007) it was pulling out of a dairy joint venture in China as operations there have developed more slowly than expected.

Danone said the decision to terminate the joint venture with Mengniu Dairy Group would not affect the planned co-packaging and distribution of yoghurts under the "BIO" brand.

The company said Mengniu Dairy Group and Danone will actively explore future cooperation opportunities in the yogurt industry.

Danone's joint venture with Mengniu began last December with a 49-51 percent stake with the focus on production of fresh dairy products. 

Danone is locked in a trademark dispute with its drinks joint venture partner in China, Wahaha. Wahaha's former chairman also accused Danone of violating a non-competition clause for holding stakes in other Chinese food companies.

Danone announced in October sold its 20 percent stake in Shanghai's Bright Dairy for US$127 million to the latter's parent, Shanghai Dairy Group, paying US$43.9 million as expenses for Bright Dairy's marketing of its products.

Danone's involvement and disputes in China has hurt its share price and a company statement in October said it was considering exposure to fewer partners.