Danone, a French food company, finally “started” on sheep milk powder.
A series of information such as equity information, total investment and legal representative of Hunan obijia nutritional food Co., Ltd. (hereinafter referred to as “obijia”) have changed; Among them, Danone Asia Pacific Holdings Pte.Ltd. has a shareholding ratio of 95%, while Wang Deliang, another shareholder of obijia, has a shareholding ratio of 5%.
In response, the relevant person in charge of Danone responded to the interface news. Danone reached a strategic cooperation with Hunan obijia nutritional food Co., Ltd. to invest in and develop its local infant formula factory and products. The transaction is expected to be completed in the first quarter of 2022.
Public information shows that obijia, headquartered in Changsha, Hunan, is mainly engaged in a series of products such as imported and domestic infant formula cattle, sheep milk powder and infant supplementary food. Obijia Hunan nutritional food production base has been under construction since 2013, with an investment of 380 million yuan. The production capacity of phase I and phase II infant formula milk powder of the factory is 10000 tons / year and 15000 tons / year respectively, and that of adult formula milk powder is 5000 tons / year and 10000 tons / year respectively. Obijia’s brands include Yang Zizi, Ou Suli and Ke Wei’an. Among them, Yang Zizi is sheep milk powder, and Yang Zizi has a flagship store in tmall.
After Chinese brands have long been involved in the powder absorption category of sheep milk powder, Danone’s move is also based on the consideration of further expanding the category of milk powder.
Danone’s 2021 financial report shows that its infant nutrition business grew strongly in the fourth quarter, among which the sales revenue in the Chinese market achieved double-digit year-on-year growth and maintained a strong market share. Chinese label products and foreign label products sold on cross-border e-commerce platforms also continued the growth momentum, and aitamei brand performed particularly well during the “double 11” period. However, under the influence of still very limited travel and cross-border trade, the sales revenue of foreign language label products in indirect cross-border channels such as overseas shopping and purchasing by relatives and friends decreased slightly compared with the same period.
Before taking a stake in obijia, Danone also tried plant-based infant formula.
In April 2021, Danone’s milk powder brand nuoyoneng sold two new soy based infant formula products in its tmall flagship store, covering two-stage and three-stage products. The store said in the product introduction that the raw material of this milk powder is plant protein, which is launched for babies with protein allergy. However, the above two products have failed to stir the market of infant plant-based milk powder in China, and the sales volume of the three-stage milk powder is only more than 100.
In contrast, sheep milk powder category has higher acceptance in China.
In July 2021, Feihe (06186. HK) acquired “Xiao Yang Miaoke”, a sheep milk powder company located in Shaanxi Province. In October of the same year, Yili (SH: Inner Mongolia Yili Industrial Group Co.Ltd(600887) ) spent 5.1 billion yuan to acquire milk powder producer Aoyou dairy (HK: 01717) through its subsidiary Jingang holdings. According to the data provided by Nielsen, from 2018 to 2020, the sales of Aoyou sheep formula milk powder accounted for more than 60% of the total imports of infant formula milk powder in China for three consecutive years, and the market share is currently the first.
Song Liang, a dairy expert, previously told the interface news analysis that at present, China’s goat milk resources are in full supply, and sheep milk powder enterprises have launched all-round competition, so a price war is inevitable. Whether new entrants or brands with the first market share, we must meet such challenges.
In addition, song Liang also analyzed that another purpose for Danone to obtain the equity of obijia is to obtain the qualification of formula registration and pave the way for the introduction of overseas products. At present, Danone has only set up a milk powder factory in Qingdao in China. The number of formula registration applied by this factory can not meet the demand of Danone’s overseas products to enter China. It will be more convenient to obtain qualification directly through the cooperation of holding the equity of local enterprises.
