April Issue of Dairy Products China News Comes Out

CCM International’s April issue of Dairy Products China News has newly published recently. The latest issue covers a range of sector developments but stand outs are Wahaha seeking dairy farms in Australia and Fonterra looking to expand its dairy farms in China. Heading to farm in either direction demands deep pockets and political goodwill. The idea of partnerships to facilitate such ventures – whether between Fonterra and Shanghai Pengxin or others – may make a lot of sense.

Certainly producing milk in China has state support: the Chinese Government wants international dairy companies to establish industrial-style farms to produce high quality fresh milk for its consumers weary of food scares centred on dairy products. Ironically perhaps – although in truth this signifies a structural adjustment in the sector which should surprise no-one – the corollary of this is that for many dairy farmers in China life is getting harder. The recent reduced prices for milk being paid by Wondersun in Heilongjiang present a contrast to the April prices rises from Mead Johnson and Nestlé. Such price rises appear to have limited impact on sales, reflecting the specifics of the product category.

At a wide level, unexpectedly low import figures for March 2012 reflect modest levels of domestic demand in China. These are figures to watch as private consumption needs to rise to reduce the need for investment spending. Doubters over the economy’s future are not hard to find, although most private sector forecasters remain positive. The Asian Development Bank, for one, expects GDP to rise to 8.5% in 2012 and consumption to grow by 12% in 2012 and 2013, reflecting higher wages and rising government expenditure on social services. It believes the latter will encourage Chinese consumers to save less: going on price trends, they may well have to. Please check the April Issue of Dairy Products China News to discover more.

Headline News in the latest issue include:

-Recently, several large-scale grain & food processors have made steps towards further diversification – a sign of trends in the market which seem likely to accelerate in the future.

-In late February, the General Administration of Customs of China confirms a higher tariff on milk powder imported from New Zealand from 1 March.

-On 6 March, the State Council issues a new policy to support the development of leading agriculture enterprises in line with recent trends in the agribusiness sector.

-Yunnan launches a guideline for the formulation of local food safety standards which is being implemented from 1 April.

-On 14 March, Yili announces its investment programme and development goals for 2012, shortly after the release of its full report for 2011.

-On 3 March, Wahaha reveals its plans for dairy farming in Australia, in line with the company’s diversification and integration strategies.

… …

Dairy Products China News, is co-published by CCM International & Orrani Consulting, which is unique in combining genuinely global experience in the dairy industry. Dairy Products China News brings you the latest information on new market dynamics, company dynamics, new dairy products and consumption trend, new legislations and policies and raw milk supply dynamics that are shaping the market. If you need more information of this newsletter, please feel free to contact us at econtact@cnchemicals.com.

About CCM International

CCM International is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM International offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer. For more information, please visit http://www.cnchemicals.com.

CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China

Tel: 86-20-37616606

Email: econtact@cnchemicals.com

Source: http://www.cnchemicals.com/PressRoom/PressRoomDetail_c_1059.html

Diversification of Large-scale Grain & Food Processors

Recently, a number of leading grain and food processors have moved towards increasing diversification and vertical integration. This is a signal of the growing integration of China’s food industry, a trend which is expected to pick up pace in the future and impact dairy markets as a result, according to CCM International’s April issue of Dairy Products China News

The prime example is Yihai Kerry, a leading agribusiness and food company processing oilseeds, grains, edible oils, palm and laurics into a wide range of high-quality food products, feed ingredients and oleochemicals at ~170 plants. The company is a leading player in multiple market segments in China, such as oilseed crushing, edible oil refining and consumer cooking oils as well as rice and wheat flour milling, etc.

On 3 March, Yihai Kerry announced the commissioning of its production lines for soy milk powder and liquid soy milk with capacities of 8,000 t/yr and 12,000 t/yr respectively: the resulting products will be launched in the East China market first, during June.

This is the group’s first involvement with liquid soy milk. It originally entered the soy milk industry early in 2009 when it acquired a soy milk powder processor in Heilongjiang with a capacity of 6,000t/yr; later, in 2011, it set up an 8,000t/yr soy milk powder production line in Qinhuangdao City, Shandong Province.

There are other similar examples, such as V V Group. On 9 March this leading grain and food processor announced that it will participate in the reconstruction of a white spirits company in Guizhou: it is to hold a 51% share of the new company once the deal is completed, which will be by the end of April. Investors seem supportive: after releasing the news, the company’s share price rocketed, reaching the upper circuit limit (10% in China) in the following days.

Also in March, the beverage giant Wahaha indicated its intention to expand into dairy farming in Australia, as well as to grow its health food and beverage business and supermarket operations in China (please see the following article in this issue, Wahaha to Invest in Dairy Farming in Australia?).

Previously we have seen COFCO buying into China’s largest liquid milk processor Mengniu. In July 2009 it acquired a leading stake of about 20% together with Hopu Investment Management– and this year has stepped this up to 28.09% after the quality scare hit Mengniu’s products. This has been the key example of diversification affecting China’s dairy sector: its involvement since then has undoubtedly allowed Mengniu to accelerate its expansion in China and overseas (please see Dairy Products China News Vol.2 August Issue, p7 & Vol.4 January Issue, p9).

The key goal of these large-scale grain & food companies is to optimise their product mix and increase their profitability and competitiveness: such diversification builds an increasingly integrated supply chain. There are also varying specific motives behind the expansion of these large-scale companies into new sectors. For example, for Yihai Kerry,the launch into liquid soy milk can help the company take full advantage of its upstream soy processing. For V V Group, its efforts to develop its white spirit business since 2009 have played an increasingly important role in the company’s development. In H1 2011, the company’s liquor business achieved sales of USD158.64 million – 41% of its total revenues and equaling the proportion of sales made up by its soy milk powder and soy milk business!

Expansion of this type exemplifies the integration of China’s food industry over the last 2 years, and fits well with the 12th Food Industry 5-Year Plan released on 31 December 2011. According to that document, the government plans to perfect food companies’ organisational structure in order to help them become more competitive, to enhance consolidation in the sector and to eliminate businesses with outdated technology. The government also plans to “foster” around 23 food companies with annual sales in excess of USD1.58 billion (RMB10 billion) and 300 famous food brands. It plans for integration to be accelerated in the next 4 years, and the larger agribusiness companies will be the main beneficiaries of this approach (please see Dairy Products China News Vol.5 February Issue, p6, Launch of the 12th Food Industry Five-Year Plan (5YP)).

Source: Dairy Products China News  1204

http://www.cnchemicals.com/Newsletter/NewsletterDetail_22.html

Content of Dairy Products China News 1204:

Diversification of Large-scale Grain & Food Processors

New Zealand Exceeds Trigger Levels Again

Government to Support Leading Agriculture Enterprises

Yunnan Launches Management Measures for Local Food Safety Standards

Yili’s Investment Programme for 2012

Wahaha to Invest in Dairy Farming in Australia?

North Dairy Expands in Ningxia

Xiaoxiniu Biological Faces Challenge to Go Public

Companies Increasingly Target Milk Production

Avante International Launches Infant Formula Products

OZ Care Formula Launch

Auscow Launches New UHT Milk

Dairy Products China News, a monthly publication issued by CCM International on the 30th/31st of every month, brings you the latest information on new market dynamics, company dynamics, new dairy products and consumption trend, new legislations and policies and raw milk supply dynamics that are shaping the market.

About CCM International

CCM International is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM International offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.

For more information, please visit http://www.cnchemicals.com.

CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China

Tel: 86-20-37616606

Email: econtact@cnchemicals.com

Source : http://www.cnchemicals.com/PressRoom/PressRoomDetail_w_1037.html