Meiji to invest $254 mil. in China dairy farm operator AustAsia to source more raw milk

16, Apr. 2020

Photo by Carolien van Oijen on Unsplash
Photo by Carolien van Oijen on Unsplash

TOKYO, NNA – Japanese dairy maker Meiji Co. will acquire a 25 percent stake in a major dairy firm operator in China to ramp up milk production and cash in on growing demand among quality-conscious consumers there.

Meiji will buy the share of AustAsia Investment Holdings Pte. Ltd. for $254.4 million from AustAsia’s parent company Japfa Ltd., a Singapore-listed agri-food company, the Japanese firm said in a statement on Wednesday.

This is Meiji’s largest capital investment ever in a company, spokesman Tomohisa Kamei told NNA on Thursday.

AustAsia launched dairy farming business in mainland China in 2009 and runs seven dairy firms – five in Shandong Province and two in Inner Mongolia Autonomous Region -- with about 80,000 dairy cows. Daily raw milk output stands at more than 1,000 tons, he said.

The Singapore-based AustAsia sells milk under the Greenfields brand at retail outlets in China while supplying it to café chains like British coffeehouse chain Costa Coffee, which is under U.S. beverage maker Coca-Cola Co., he added.

Meiji, which began procuring AustAsia’s raw milk in 2015, aims to source more high-quality raw milk to expand its milk and yogurt production in China.

An AustAsia milk cow in China boasts high-productivity, delivering about 34 kilograms per day, compared to those in Japan at around 10 kg, Kamei said.

Meiji plans to add production lines for milk, probiotic drinks and yogurts at Meiji Dairies (Suzhou) Co., a local manufacturing unit, to begin operation in March 2021. Meiji Dairies (Tianjin) Co., established last September, will also begin production in the second half of fiscal 2022.

In China, the Tokyo-based dairy firm posted 450 million yuan ($63.6 million) in sales in 2018, including various dairy products, and hopes to double the figure in 2023 and quadruple it in 2026, the spokesman said.

Japfa, which produces items from animal proteins to dairy and consumer products, holds a 100 percent stake in AustAsia and plans to restructure the subsidiary this month to transform it into a firm focusing mainly on dairy operations in China. Japfa undertakes dairy farming and milk production in Indonesia.

AustAsia Investment Holdings posted $122 million in pre-tax profit on sales of $380 million, according to Meiji’s statement.