FrieslandCampina, Huishan to establish infant milk formula JV in China

Dutch dairy cooperative Royal FrieslandCampina and China Huishan Dairy Holdings have entered into exclusive talks to create a joint venture (JV) to produce, market and sell infant milk formula in China.

The JV is aimed at operating a fully integrated infant milk formula supply chain in China.

The formal agreements are said to be subject to conditions precedent, including a due diligence review and other conditions.

Huishan will supply its high-quality raw milk from its own dairy farms in China to the JV for the production of infant milk formula.

The companies intend to run their existing infant milk formula businesses separately; as such, Huishan will carry on marketing its own brands, and FrieslandCampina’s Friso brand will still be exclusively produced in the Netherlands and marketed by the cooperative.

The companies believe that the proposed JV will benefit from their respective production, sales and marketing capabilities.

Both parties already successfully cooperate in the production of non-dairy creamers.

Huishan, which is a vertically integrated dairy company in China, covers the entire dairy value chain, from growing and processing of alfalfa and supplementary feeds to dairy farming and processing and sales of dairy products.

Its branded liquid milk products are said to hold the highest market share in the north-eastern provinces of China.

In China, FrieslandCampina is known for its premium brand infant formula Friso, and for selling ingredients to Chinese food and infant formula manufacturers.

In November 2013, FrieslandCampina, Wageningen University & Research Centre and the China Agricultural University established the Sino-Dutch Dairy Development Centre to improve dairy production, safety and quality levels in China.

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Image: FrieslandCampina and Huishan plan to create a JV for infant milk formula production in China. Photo courtesy of Royal FrieslandCampina N.V.