Top Biz News

Mengniu starts yogurt JV

By Jiang Wei (China Daily)
Updated: 2006-12-19 14:50

China's largest milk producer, Mengniu Dairy Co, announced yesterday it would form a joint venture to make yogurt with the French giant Groupe Danone.

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The HK-listed Mengniu said it will hold a 51 per cent stake in the joint venture, and Danone will have the other 49 per cent.

Both parties declined to provide any further financial details.

"As the world's largest yogurt supplier (in terms of volume), Danone possesses the most advanced technology," said Yang Wenjun, president of Mengniu. "Strong support from Danone will not only strengthen the joint venture's competitive advantages, but will contribute to the technological advancement of the dairy industry in China."

Pierre Couderc, Danone's president, said the company wants to tap its Chinese partner's "extensive nationwide distribution network" in China.

"We hope that we will be able to strengthen our capabilities by partnering with Mengniu," he said. "The co-operation presents an excellent opportunity for both parties."

However, the deal was still described as "unexpected" by some analysts, as Danone is the third largest shareholder of Mengniu's rival, Bright Dairy & Food.

Danone increased in April its stake in Bright Dairy to over 20 per cent. The Chinese firm produces and markets yogurt in mainly East and South China.

Qin Peng, president of the French company's China business, told reporters "the company's co-operation with Bright Dairy will not change."