Danone acquires 95 percent stake in Chinese infant formula company Eurbest Nutritional Food 04-20-2022

Eurbest is a Chinese company that specializes in the production and sale of infant formula and goat milk. According to a recent report from the analytics company Qichacha, Eurbest’s shareholding information changed on March 2. According to the report, the French dairy giant Danone paid RMB 287 million in exchange for 95% of Eurbest's shares and became the new controller of Eurbest, while the original shareholder, Dechun Wang, withdrew control. Deliang Wang continues to hold 5% of Eurbest's shares.

According to Danone’s reply to a news reporter, Danone has entered into a strategic partnership with Eurbest to invest in and develop its local infant formula factory and products. The transaction is expected to be completed during the first quarter of 2022.

Danone invests in multiple large-scale infant formula companies in China

Danone is a well-known multinational food and beverage company with operations in more than 120 markets around the world, with more than 100,000 employees, and sales revenue of over 24 billion Euros in 2021. Danone also owns a series of infant formula milk powders such as Aptamil and Karicare, and beverage brands such as Evian and Mizone.

Eurbest was founded in 2010, and was mainly involved in imported and domestic infant formula, cattle and goat milk powder, infant food supplements, and other series of products. Its representative products include the infant formula goat milk powder "Yang Zizi", as well as formula milk powders "Osuli" and "Kewei'an." According to information from the Eurbest official website, Eurbest has nearly 3,000 distribution customers, and its distribution covers more than 10,000 infant stores, and its sales network covers 1,500 county markets.

Before the investment in Eurbest, Danone acquired 100% of the equity of Maigao Dairy (Qingdao) Co., Ltd. in 2020, and launched the locally produced grass-fed dairy infant formula product "Yunhui" by using the formula registration qualification of the Maigao factory in 2021. Furthermore, not long before Danone invested in Eurbest, Mead Johnson China acquired the goat milk powder brand Milk Goat.

Chinese infant milk powder brands threaten foreign dairy companies in Chinese market

The rise of Chinese infant milk powder brands has threatened foreign dairy companies such as Danone in the Chinese market. Coupled with the ongoing pandemic, Danone's international business growth has declined sharply. Due to the pandemic and the continuous closure of ports in Europe, Oceania, and Hong Kong in 2020, Danone China's cross-border infant milk powder business fell by 60% during the third quarter of 2020. Danone said it would shrink its cross-border business. Danone's 2021 financial report shows that in 2021, the company achieved a net sales revenue of over 24 billion euros, a YoY increase of 3.4%. However, during the first quarter of 2022, the company's profit fell by 0.2% YoY.

Another international giant, Nestlé, also saw total sales increase by 3.3% in 2021 to USD 92.4 billion. However, the company's sales growth in China in most categories was also partially offset by a decline in sales of infant nutrition.

For more information, please check our Dairy Products China News.

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