Sales of dairy products declined for Danone in first half

Group Danone, Paris, said its first-half sales increased 4.6%, led by increases in the company’s water, early life nutrition and medical nutrition business lines. Sales of fresh dairy products declined. The performance is “in line” with the company’s plan and it is “laying a solid foundation for a model for profitable, sustainable growth,” according to a press release issued today.

Danone pointed out that:

  • In Europe, the company continued to adapt its Fresh Dairy Products portfolio, while benefiting from Chinese demand for international Infant Milk Formula (IMF) brands.
  • In China, following the accelerated structural changes in distribution dynamics for IMF, Danone has decided to reallocate its resources within this market and subsequently to revise downward long-term sales projections for Dumex, leading to an impairment of the brand.
  • Danone has reached a preliminary agreement with Mengniu and Yashili to merge Dumex in China with Yashili, building a strong local IMF brand platform, and to increase its shareholding in Mengniu.

Volume growth in the Asia-Pacific/Latin America/Middle-East/Africa regions increased 3.8% in the first half compared to last year; volume declined in Europe, North America and the Commonwealth of Independent States regions.

China's MIIT to support M&A in milk powder industry

Smart Agriculture Analytics reported that on June 30, China’s Ministry of Industry and Information Technology held a work conference on reorganization in the infant formula industry. In the past year alone, there have been over 20 mergers and acquisitions in the industry. By the end of 2014, China’s milk powder industry had a ten-firm concentration ratio of 54.2%. Wang Liming, the Ministry’s chief engineer, said that more government supervision and implementation are necessary to further stimulate concentration in the industry.

Zhongding to build massive Sino-Russian dairy project in Heilongjiang, China

On June 29, China announced that it would be investing nearly RMB 1 billion in a jointly run dairy project with Russia. Smart Agriculture Analytics reported that The planned dairy will have 100,000 dairy cows and will be built in the Chinese city of Mudanjiang.

China’s Zhongding Dairy and Russia’s Severny Bur will be the main actors in the project, which will cover 100,000 hectares. Last week, Russia extended its ban on food imports from the EU, the United States, Australia, Norway, and other countries to August 2016. The project will primarily supply dairy products to Russia.