China Mengniu Dairy Co. has signed an agreement with U.S.-based WhiteWave Foods Co. to jointly produce and sell nutrition products in China. Mengniu will hold 51% and WhiteWave will hold 49% of the new venture which is expected to receive approval from Chinese authorities in the first half of 2014. The new venture has agreed to offer US$62.2 million to purchase Chinese infant formula maker Yashili’s nutrition plant currently being built in Central China’s Hunan Province. Mengniu is under pressure to expand its product offerings as its core business – liquid milk, has little to no room for growth amid fierce competition from foreign brands and consolidation. According to an April report from market research firm China Competition Information, sales in China’s nutrition industry increased 32% year on year in 2012 to reach 113 billion yuan (approximately US$18.7 billion), and by 2018 industry sales are expected to reach 430 yuan (approximately US$71.5 billion). WhiteWave which sells plant-based foods and beverages in North America and Europe sees the joint venture as a way to access China’s growing nutrition market as the country nears the implementation of its new second-child policy and its aging population continues to grow.
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