February 12, 2014
Paris-based Danone SA has more than doubled its stake in China’s largest milk producer, China Mengniu Dairy Co. Danone paid US$663 million (€486 million) to increase its stake in Mengniu from 4% to 9.9%. In May 2013 Mengniu and Danone announced a joint venture with Chinese state-controlled Cofco to develop more yogurt products for the growing Chinese market. Yogurt sales in China increased 16% to US$8.63 billion in 2013 with Mengniu controlling approximately 19% of the market according to Euromonitor. The increased stake will lend Danone more weight in the joint venture. Danone is working to regain standing in China and overhaul its operations after its supplier, Fonterra, suffered a contamination scare last summer, and in a separate event Chinese officials fined Danone for price fixing infant formula forcing the company to cut prices by 20%.
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