Published on : Aug 28, 2014
Fonterra Co-Operative Group Ltd. will partner with Beingmate Group Co, China’s biggest infant formula manufacturer to increase its reach in the Chinese market. The New Zealand-based company makes this move with the intent to grab a bigger market share in China after it suffered many setbacks in the food-safety scandal last year.
This partnership will also help Beingmate Group Co to gain access to Hangzhou-based manufacturer’s extensive distribution network. However, the deal will be subject to approvals from the Chinese government and regulatory boards. This deal is also garnering immense unwavering backing by Beingmate\'s shareholders in order to protect the national baby-food industry from foreign manufacturers.
Until a year ago, Fonterra was selling baby food in China under the brand name of Anmum. Fonterra Co-Operative Group Ltd is hoping to make its mark in the Chinese industry by winning businesses from multinational and local competitors on the backdrop of rising demand for infant formula as China eases its one-child policy.
The partner between Fonterra and Beingmate will give the former a trustworthy local partner, who provides the much needed guidance to comply with strict regulatory framework for baby food formula. The tight guidelines are fallout of growing concerns over food safety as health scares still haunt Chinese food industry. According to Euromonitor International, Beingmate held 9.4% share in the infant formula in China.
Under the deal, Fonterra will acquire 20% in Beingmate Baby & Child Food Co. unit at a price of $2.93 per share. Towards the end of 2018, the New Zealand-based company will have about three to five large milk-powder groups to raise its yearly revenue to ¥5 billion. Each of these products would account for 80% of local sales.