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
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
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
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 China
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 China ’s dairy sector: its involvement since then has undoubtedly allowed Mengniu to accelerate its expansion in China
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
http://www.cnchemicals.com/Newsletter/NewsletterDetail_22.html
Content of Dairy Products China
Diversification of Large-scale Grain & Food Processors
Government to Support Leading Agriculture Enterprises
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.
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