DANISH MILK POWDER TO CHINA

ARLAFOODS: Europe’s largest dairy group, Arla Foods, has entered an agreement concerning local production of milk powder in retail packs for the Chinese market

Arla Foods and the Chinese dairy company China Mengniu Dairy Company have entered a collaboration regarding production of milk powder in consumer packing for the Chinese market.

     The background to the establishment of the Chinese collaboration is a growing Chinese market for milk powder as well as increased imports by the country. So the joint venture will produce locally and distribute milk powder in consumer packs, as well as handling importation and distribution of highly refined Scandinavian produced milk powder. The expectation is to establish a significant position on the Chinese market.

     The JV between Arla Foods and China Mengniu Dairy Company, in which Arla will own 49% and Mengniu 51%, will be established 1 October 2005. “Our establishment on the Chinese market is a good example of a combination of export and local production of retail packed milk powder. It is also important to replace our bulk production with several highly refined products for the benefit of our co-operative members”, says managing director Peder Tuborgh, Arla Foods.

     Milk powder in consumer packs is a strategic core business for Arla Foods. Since China is the world’s largest market for consumer packed milk powder, it is natural for Arla Foods to look at opportunities for growth in China.

Ambitious partner
China Mengniu Dairy was founded in 1999 by owner Mr. Niu Genseng, and just five years later it was listed on the Hong Kong Stock Exchange. Mengniu is the leading dairy company in China and also the fastest growing. It is located in an area north of Beijing with good conditions for milk production.

     “Partnership has been the key to our business strategy when it comes to the Chinese market. We have the necessary knowhow regarding highly refined milk powder products, and our partner has an excellent distribution and sales network which gives our collaboration a good starting point”, says sales director Jais Valeur, Arla Foods Ingredients.