Signing of contract by the management teams of Yili and Ausnutria (photo: Yili)
On October 27, 2021, Inner Mongolia Yili Industrial Group Co., Ltd. , the largest and most valuable dairy producer in Asia, announced that it took a stake in goat milk formula giant Ausnutria Dairy Co. Ltd. and became its largest shareholder (34.33%). This marked the largest M&A deal of China’s dairy industry in recent years.
According to the announcement made by Yili Group, the company will team up with Ausnutria Dairy through its wholly-owned subsidiary Hong Kong Jingang Trade Holding Co., Ltd. (“Jingang”), as a step to move into the infant formula and nutrition product business.
Strategically, as noted by analysts, the partnership between the two companies will produce win-win results. On the one hand, as a dairy leader covering all categories with a complete industrial chain, Yili is unparalleled in Asia as the only Asian company in the Global Dairy Top 5, and it has made inroads into the healthy food industry. On the other hand, Ausnutria Dairy is a rapidly growing international company offering infant formula and other nutrition and health products, with the world’s best-known goat milk brand. Therefore, the two companies are highly complementary in terms of their supply chains, channels, and product portfolio, and their partnership will form strong synergy.
Infant formula featuring high growth rate and high value is a category that Yili will focus on and tap into its full potential in the future. According to the latest data from Nielson, in August 2021, Yili’s Jinlingguan Series took the lead among all brands of its kind in terms of the growth rate of all channels in the Chinese market. Yili is also capturing a growing share of the market of goat’s milk infant formula. The newly launched Jinlingguan UITSTEKEND GEITENMELK stood out with premium quality and saw a surge in sales as high as 200%.
As one of the leaders in the infant formula market, Ausnutria has seized the opportunity offered by goat milk and emerged as an international dairy company covering infant formula, nutrition products, and other product categories. Kabrita, Ausnutria’s goat milk formula brand, has become a flagship product in China’s infant formula market. According to Nielson, Ausnutria has had a share of over 60% in China’s market of imported goat milk formula for three consecutive years since 2018 and topped the world in total sales of goat milk formula.
Supported by Yili’s competitive strengths and management experience along the whole dairy industrial chain, when the transactions between the two parties is completed, Ausnutria will see a strong boost to its development in the long run, and Yili will be able to speed up its strategic move into the milk formula business. Starting their partnership from infant formula, especially goat milk-based formula, the two companies will share their strengths in purchasing, marketing, location, and R&D so as to ramp up their competitive edges in their respective markets.
For a competitive player in infant formula, Ausnutria has also established a comprehensive layout in nutrition products such as dietary supplements, probiotics, and food for special medical purposes, and it is developing into a high-end nutrition product and health service provider covering all ages and the full life cycle. At this point, the integration of optimal resources from both sides will also facilitate Yili’s entry into the market of nutrition products.