FrieslandCampina and Huishan Plan JV for Infant Formula Milk in China
09 May 2014 --- Dutch dairy company Royal FrieslandCampina and China’s Huishan Dairy Holdings (Huishan) have entered into exclusive talks on a joint venture for infant milk formula in China. The purpose of the joint venture is to operate a fully integrated infant milk formula supply chain. Both companies will continue to run their existing infant milk formula businesses separately.
A spokesman for FrieslandCampina told FoodIngredientsFirst that the Chinese government has been working hard to ensure that high quality infant milk is produced locally in China. “FrieslandCampina has a broad experience in producing high quality and reliable dairy products,” he explained. “The joint venture will operate according to the high standards in the Netherlands. A joint venture with Huishan and FrieslandCampina will be well positioned to deliver on this.”
Demand for infant formula in China is booming as the number of middle-class families increases and more women seek to return to work. China is also expected to see its fourth baby boom, according to experts.
And Chinese consumers are likely to welcome the JV news, as there has been a move away from existing domestic-produced infant formula in favor of imported European brands, following the 2008 infant formula scandal. The crisis, which involved a number of brands, led to the deaths of six infants and thousands were hospitalized from drinking formula tainted with melamine.
“We believe there is a good opportunity for both Huishan and FrieslandCampina,” confirmed the spokesman. “Both companies will continue to run their existing infant milk formula businesses in China separately. FrieslandCampina’s brand Friso will still be exclusively produced in the Netherlands and marketed by FrieslandCampina.”
In this joint venture, Huishan and FrieslandCampina will leverage their respective experience and expertise to produce, market and sell high-quality infant formula products in China. Huishan will provide its high-quality raw milk from its own dairy farms in China to the joint venture and the new company will produce and market infant milk formula.
Huishan and FrieslandCampina believe that the proposed joint venture will benefit from their respective production, sales and marketing capabilities. The companies already successfully cooperate in the production of non-dairy creamers.
