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Mengniu poised for APAC expansion, analysts say

The proposed acquisition of Lion Dairy and Drinks would be just the start of big expansion plans for Chinese company Mengniu Dairy, according to data analytics and consulting company GlobalData.

The Australian Competition and Consumer Commission last week gave the green light for the acquisition, which would see Lion D&D’s dairy business (currently a subsidiary of Japanese owned Kirin Holdings), sold to Mengniu for a reported  AU$600 million.

It would include brands such as Dairy Farmers, Pura, Union Iced Coffee, Dare, Vitasoy plant-based milks and Big M, among others.

However consumer insights analyst from GlobalData Shagun Sachdeva said it would be just the start of Mengniu’s investment, predicting they will look to expand further into the Asian market.

And according to Global Data estimates, the sector is set for huge growth.

They predict the Asia-Pacific (APAC) dairy and soy food sector to be worth US$167.7 billion by 2023 (up from US$128.5 billion in 2018), while the sector in Australia could reach US$9.77 billion.

“Mengniu Dairy was already looking for opportunities to diversify its business and expand its brand presence in the emerging markets. The transaction will allow Mengniu to enhance its presence in the Australian market and strengthen its portfolio by leveraging Lion’s longstanding brand presence and manufacturing and cold chain distribution hold across Australia. The transaction will strengthen Mengniu with a stronger foundation to excel in the Asia-Pacific region,” Ms Sachdeva said.

“Mengniu has recently completed the US$1.5bn takeover of infant formula company Bellamy’s Australia Ltd, in line with its aggressive acquisition strategy. The series of acquisitions will create greater synergies for the group not only from the geographical footprint point of view but also from the supply chain perspective as well.”

The finalisation of the Lion D&D/Mengniu deal is subject to approval from the Foreign Investment Review Board and closing conditions.

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