Recently, a
document concerning the trading plan between Mengniu and Arla has been issued
officially by the Chinese Antimonopoly Bureau of State Administration for
Market Regulation. As it is scheduled in the plan, the both parties will
establish a business joint venture. In addition, the joint venture will acquire
all equity of Inner Mongolia Mengniu cheese Co., Ltd., a cheese subsidiary of
Mengniu. This cooperation means that Mengniu is going to put all of its cheese
business into the new joint venture. Arla and Mengniu will work mutually for
the brand Arla Foods, which will be operated by the joint venture.
The new joint venture seen as further extension
for cheese business between Mengniu and Arla based on earlier cooperation
Earlier in
2019, Arla and Mengniu already established a joint venture especially for
cheese business. The recent cooperation is considered as another extension for
the cheese business in order to complete the integrated cooperation from the
manufacture to the terminal sales.
According
to Mengniu, the product lines of the new cheese joint venture vary from cheese
for kids, cheese as snacks, and table cheese to high-end cheese products. The
main brands are Arla Foods, Castello and Lurpak.
China ranks first in world’s CAGR despite small
cheese market
It is
analysed in the statistics released by Mintel that China has the highest CAGR (Compound
Annual Growth Rate) over the last five years in the world despite the small
cheese market in the country. On the contrary, European countries that have a
mature cheese market, such as the UK, Spain, Belgium, Switzerland, Finland and
Italy, have slight difference in the growth for recent years.
Arla’s technology and Mengniu’s marketing capability
to be used fully in the new joint venture
The two
dairy giants, Mengniu and Arla, make full use of their own advantages in the
joint venture.
Arla
provides mainly the advanced technology for the production of cheese and the strong
research and development capability in the field of cheese. In the meanwhile,
Mengniu plays an important role in marketing and promotion in China. Its
wide-ranging distribution channels can be a very profitable resource.
Arla considered as the second biggest strategic
shareholder of Mengniu with long term cooperation
About 8
years ago Arla already started to become one of the key strategic partners of
Mengniu. In 2012, the two parties signed a strategic cooperation agreement in
Denmark. Since then, Arla bought 5.9% of shares in Mengniu, making itself as
the second biggest strategic shareholder of the Chinese dairy giant.
Mengniu has
taken it as an opportunity to develop itself to an international advanced level
in the management of dairy. As the second largest strategic shareholder, Arla
takes part in the actual operation of Mengniu, such as introducing the
management system of ranch from Denmark into Mengniu, sending groups of experts
to work together with Mengniu teams, introducing new technology to improve the
production of milk and so on. Thanks to the long term cooperation, the two
dairy giants integrate themselves successfully into the international advanced
dairy management, varying from the milk source to the production and quality
control.
For more
information on China’s dairy market, please check our Dairy
Products China News or email emarket1@cnchemicals.com.