Groupe Danone in fresh dairy products j.v. in China

by Eric Schroeder
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PARIS — Groupe Danone has signed an agreement with China Mengniu Dairy Company Ltd. creating a joint venture that will produce and distribute fresh dairy products in China.

"The joint venture will combine Mengniu’s position as China’s market leader in dairy products and Groupe Danone’s technology and marketing know-how to bring high quality dairy products to Chinese consumers and will contribute to improve the Chinese dairy industry," Groupe Danone said.

Under terms of the agreement, Groupe Danone will hold a 49% stake in the venture, while Mengniu will have a 51% stake.

Established in 1999, China Mengniu Dairy has 20 plants in 15 provinces in China. The company has approximately €1 billion in sales.

Paris-based Groupe Danone entered China in 1987 and now has annual sales of approximately €1.2 billion in that country. In April, Danone increased its stake in Shanghai-based Bright Dairy to 20.01% from 11.55%. Bright Dairy has a dominant market share in the Shanghai region and was China’s fourth-largest dairy producer by sales in 2005.

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