Preface: The domestic dairy market is highly homogenized, forcing Yili to increase its high-end product offerings. Organic yogurt may become an important lever for Yili to pull ahead of competitors. Image source: VCG Perhaps Yili's abandonment of the China Shengmu acquisition was to pursue Stonyfield. According to the U.S. Post, on May 9 (U.S. time), Yili Co., Ltd. is participating in the bidding for Stonyfield, the largest organic yogurt producer in the U.S., which is a subsidiary of French dairy giant Danone. Stonyfield was founded in 1983, and Danone acquired a stake in 2001, gradually taking control. In 2016, Stonyfield's revenue was approximately $370 million, with a net profit of $50 million. On March 31 this year, Danone stated that to expedite the acquisition of WhiteWave, a U.S. dairy producer and organic food company, it would sell its U.S. subsidiary Stonyfield. This was part of the antitrust agreement with the U.S. Department of Justice regarding the WhiteWave acquisition. On April 13, Danone announced the completion of that acquisition. This could be the best time for acquirers. According to two people close to the deal, Yili has offered $850 million for Stonyfield, but competing bidders include U.S. dairy manufacturer Dean Foods. Dean Foods is the largest fluid milk producer and supplier in the U.S., with a product line including plain milk, flavored milk, ice cream, fermented dairy products, and dairy beverages, under more than 50 local or regional brands. In 2015, Dean Foods' total revenue was $8.1 billion, with fluid milk accounting for 71%. In Rabobank's 2016 Global Dairy Top 20 list, Dean Foods ranked 10th, surpassed by Chinese dairy company Yili (8th). Coincidentally, after spinning off WhiteWave in 2013, Dean Foods is now eyeing Stonyfield, which Danone is divesting, to re-enter the organic dairy segment. However, Dean Foods has not yet made an offer. Yili China responded to Jiemian News that all announcements should be taken as the official word. Danone and Dean Foods have not commented. As China's largest dairy company, Yili's previous terminated acquisition target was also organic dairy. In October last year, Yili announced a 4.6 billion yuan acquisition of 37% of China Shengmu, which would have made Yili the largest shareholder. Yili stated at the time that the intention was to leverage Shengmu's organic raw milk advantages. China Shengmu is the largest organic dairy company in China, producing 1,200 tons of organic milk daily, equivalent to 20% of the world's total. However, on April 28 this year, Yili and China Shengmu jointly announced the termination of the acquisition, citing "failure to receive approval from the Ministry of Commerce's Anti-Monopoly Bureau for the concentration of undertakings under the transaction agreements." Subsequently, the Ministry of Commerce stated that it had actually made an anti-monopoly review decision on April 13 and did not prohibit the acquisition. Given severe homogenization in the domestic dairy market, Yili has increased its high-end product layout in recent years. According to the 2016 financial report, sales of high-end products such as Yili Jindian, Ambrosial, Changqing, and Life Up accounted for over 50% of total sales. Just the room-temperature yogurt Ambrosial alone exceeded 8 billion yuan in sales, contributing at least 1.2 billion yuan in net profit to Yili. As the only domestic dairy company with revenue exceeding 60 billion yuan, Yili has already expanded overseas. Its New Zealand formula plant, which began construction at the end of 2012, has officially started production. It has also established overseas R&D centers in the Netherlands and the U.S., launching high-end products. If Yili successfully bets on the organic yogurt market, it will strengthen its ability to outpace competitors. Source: Jiemian News Original link: http://www.jiemian.com/article/1309980.htm