The Southeast Asian market, with its large population and strong dairy consumption, is attractive to domestic dairy companies.
As the domestic dairy market becomes saturated, Chinese dairy giants are increasingly focusing on nearby overseas markets.
On the evening of November 29, Yili Co., Ltd. (600887.SH), China's largest dairy company, announced the acquisition of Thailand's largest ice cream company, while Mengniu Dairy (02319.HK) announced the official opening of its first factory in Southeast Asia. The two dairy giants are intensifying their efforts in Southeast Asia. In the industry's view, the Southeast Asian market, with its large population and strong dairy consumption, is highly attractive to domestic dairy companies.
According to Yili's announcement, Yili will acquire a 96.46% stake in Thai dairy company THE CHOMTHANA COMPANY LIMITED ("Chomthana") through its wholly-owned subsidiary Hong Kong Jingang Trading Holdings Co., Ltd. ("Jingang Trading"), with an initial consideration of $80.56 million. The signing ceremony was held in Bangkok on the same day.
Chomthana is Thailand's largest local ice cream and frozen food distribution company, with over 37 years of industry experience. Its products cover ice cream, bread, desserts, and other areas. In 2017, Chomthana generated revenue of $34.38 million and net profit of $3.23 million.
Yili responded that Chomthana has a certain production scale, a relatively complete industrial chain layout, ample cold chain storage facilities, and a cold chain logistics system covering all of Thailand, which is conducive to Yili's entry into the Thai market. Additionally, Thailand is the second-largest ice cream market in Southeast Asia after Indonesia, and Chomthana exports products to 13 countries, which also helps Yili radiate to neighboring markets. After signing with Chomthana, Yili will fully promote the complementary advantages of China and Thailand, leverage strategic synergies, and further expand in Southeast Asia.
Shen Meng, executive director of Chanson Capital, told Yicai that this acquisition is an important step in Yili's internationalization, as Thailand is a key country in Southeast Asia and an important node of the Belt and Road Initiative.
On the other hand, Yili's move into Thailand also aims to consolidate its Southeast Asian layout. On October 23, Yili announced that its JOYDAY ice cream products (11 SKUs) officially entered the Indonesian market. These products were developed after in-depth research of the Southeast Asian market. Yili expects to cover more than 20 cities across Indonesia by the end of this year and hopes to further expand its market scope in Southeast Asia based on the Indonesian market.
Given the hot weather in Southeast Asia and strong demand for cold drinks, Yili clearly sees this as a key breakthrough area.
On November 29, Mengniu also announced the official opening of its YoyiC factory in Cikarang, West Java, Indonesia. This is the first factory built by a Chinese dairy company in Southeast Asia.
Public information shows that the Mengniu Indonesia factory covers an area of 15,000 square meters, with a total investment of $50 million. It has a designed daily production capacity of 260 tons and an annual output value of $160 million. It mainly produces YoyiC lactic acid bacteria drinks and yogurt, with products expected to be launched in the Indonesian market in December.
Ji Xiaodong, head of Mengniu's public affairs department, told Yicai that internationalization has always been one of Mengniu's core strategies. Currently, the Southeast Asian market holds a key position in Mengniu's internationalization strategy, and Mengniu products are sold in most Southeast Asian countries. The decision to build an overseas factory in Indonesia was made after long-term consideration. Indonesia has a population of 264 million, ranking fourth in the world and the largest in Southeast Asia. Additionally, Indonesia's GDP maintains a growth rate of 5% annually, offering broad market prospects.
At the opening ceremony, Mengniu President Lu Minfang revealed that in recent years, the group's overseas business has maintained a high growth rate of around 30%. Currently, Southeast Asia is just the first step. In the future, based on successfully operating in the Southeast Asian market, Mengniu will gradually expand into Africa, Latin America, Europe, and the United States.
It is worth noting that this year, the two dairy giants' active expansion into Southeast Asia also reflects their intention to open a second battlefield.
Song Liang, an independent dairy analyst, told Yicai that in recent years, competition in the domestic dairy market has been fierce. Southeast Asia has a population of 600 million and strong dairy consumption. In recent years, dairy imports in Indonesia, Thailand, and other countries have grown rapidly, making it a huge incremental market. This also responds to the national call for the Belt and Road Initiative.
In Song Liang's view, previous overseas development by domestic dairy companies mostly focused on raw materials. This time, the Southeast Asian layout aims to integrate into the local market. In the future, both companies should have further plans to develop the Southeast Asian market, as most of the world's top ten dairy companies are internationalized. At the same time, overseas expansion will greatly help Yili and Mengniu achieve breakthroughs in the thousand-billion scale.
Source: Yicai
The 10th B-end E-commerce Study Tour -- "From Product to Scenario"
Event Date: December 10-13
Event Locations: Wuhu, Nanjing, Changsha
Event Schedule:
December 10 morning: Visit Three Squirrels headquarters + snack store
December 10 afternoon: Visit Nanjing Squirrel small store
December 10 evening: Visit Nanjing Master Gao Beer Workshop
December 11 all day: Nanjing-Changsha, or free arrangement
December 12 morning: Community group buying exchange salon
December 12 afternoon: Koala Select Heroes League press conference
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