July 29, 2015

Danone, Yashili to collaborate on new baby milk plant in NZ

French dairy giant Danone and Chinese infant formula maker Yashili will collaborate on the latter's new NZ$212-million (US$141.8-million) infant formula plant in New Zealand, part of a deal wherein Yashili has agreed to acquire Danone's Dumex brand products in China.

In a filing at the Hong Kong stock exchange, Yashili said it intends to collaborate with Danone in building a manufacturing plant Pokeno, 50 kilometres southeast of New Zealand, with the aim of "achieving synergies and support in various areas".

Earlier Danone said it had reached a preliminary agreement to merge its Dumex China brand with Yashili to "build a strong local infant milk formula brand platform". It has decided to give up on its Dumex brand in China due to tightening competition, adding that Dumex-brand products "remained well below levels observed in early 2013" and that long-term sales projections were pointing toward a downward direction. China remains the world's largest market for infant formula whose sales are expected to grow to $32 billion by 2017.

The milk powder plant is slated to open in October after an eight-month delay after it gets the required approvals under China's complex food safety regulations for imported milk powder. It was scheduled to open last February.

The new factory would be the biggest single drying plant for infant milk in Asia, capable of processing 300,000 litres of milk daily when fully operational. Yashili intends to export all its products to China. --Rick Alberto (rickalberto@efeedlink.com)