Danone to raise stake in Mengniu

RetailME Bureau

Danone, a globally leading yogurt maker, agreed to raise its stake in China Mengniu Dairy Company Limited – a manufacturing and distribution company of dairy products and ice cream – at an investment worth $663 million witnessing increasing demand for foreign brands as they are being perceived as safer.

The partnership will help Danone boost sales in China’s yogurt market that is estimated to grow 57% to $11.7 billion by next year, says Euromonitor International. Mengniu will benefit from working more closely with a French brand as food scandals including rat, fox and mink meat sold as mutton, tainted liquor and excessive antibiotics in chicken have fuelled demand for safer products.

Danone’s investment follows agreements signed in May last year with Mengniu and Cofco to help expand its brands in the most populous nation. The deal is subject to the approval of Mengniu’s shareholders, and is expected to be finalised within the next few months.