February 28, 2008

 

China's Bright Dairy reports 30-percent sales increase, after Danone exit

 

 

Shanghai-based Bright Dairy & Food Co., which parted with French partner Danone last year, announced that its sales jumped 30 percent in January from a year earlier.

 

The company has focused on high-end products such as yoghurt and expands beyond its home base.

 

Bright Dairy, which posted three consecutive years of slowing growth, also plans to reduce its reliance on urban supermarkets by expanding into smaller cities and rural areas, according to president Guo Bingheng.

 

Sales of Bright Dairy is concentrated in eastern China and lags bigger rivals Mengniu Dairy and Yili Industrial Group.

 

Last year, Danone, the world's biggest yoghurt maker, sold its 20 percent stake in Bright Dairy, ending their decade-old partnership.

 

Bright Dairy said it is struggling with rising raw material costs, as the government has placed restrictions on price hikes by Chinese dairy firms to fight inflation.

 

Wang Yiguo, food analyst at China Jianyin Investment Securities Co., said the shift to high-end products is the right strategy to protect margins.

 

Wang expects Bright Dairy's sales to grow 15 to 20 percent annually in the next five years, following several years of stagnation due to mismanagement and an ineffective strategy.

 

Its sales of milk powder and cheese jumped 80 percent in January, while revenue from a new, internally developed yoghurt brand reached RMB4 million (US$560,000) in the first month of sales alone.

 

Bright Dairy is currently China's biggest seller of yoghurt.