Switzerland-based food and beverage giant Nestle SA announced it has sold a 95 percent stake in one of its Chinese dairy manufacturing facilities to a local player, as it looks to reduce its raw milk powder output in an oversupplied market. Nestle Hulunbuir Ltd will become a joint venture called Saishang Nestle Hulunbuir Ltd, with the 95 percent stake held by Longhua Zhongchen Enterprise Management Consulting Centre, a shareholder of Ningxia Saishang Dairy Ltd. Nestle will retain the remaining 5 percent stake in the joint venture…Full Article: China Daily May 2018

Key Point

  • As a result of the joint venture deal, Nestle will acquire a 6% stake in Ningxia Saishang Dairy, a Ningxia-based dairy that produces milk powder, cream, and cheese.

ChinaAg Comments

  • From January to September 2017, Nestle’s revenue suffered a -0.4% year-on-year decline.
  • In 2016, Yinlu Foods Group suffered “double digit” losses and negatively impacted Nestle’s financial growth.
  • In 2011, Nestle acquired a 60% stake in China’s Yinlu Foods Group (ready-to-drink Nescafé coffee).
  • In 1997 Nestle began acquiring Chinese companies and has since acquired eight (i.e. Hsu Fu Chi, Yinlu, and more).
  • In 1988, Nestle first established a presence (e.g. model farms, technical assistance projects) in Yunnan province.
  • Founded in 1985 and headquartered in Xiamen, Fujian Province, Yinlu Foods Group produces and distributes processed (canned) food and beverages.

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