China Mengniu Dairy raises holding in raw milk supplier

China Mengniu Dairy Company Limited has raised its shareholding in China Modern Dairy Holdings Ltd from 1% to 28%. This was accomplished through acquiring stake from Advanced Dairy Company Ltd. and Crystal Dairy Holdings Ltd., controlled by private equity investors KKR and CDH, respectively. The stroke makes Mengniu the largest single shareholding of Modern Dairy.

Mengniu is a leading branded consumer dairy product manufacturer with market in China, and has in recent years concentrated on supply of raw milk that meets high standards.

With headquarters in An’hui, Modern Dairy is a pioneer in bringing international best practices to dairy farming in China. Only founded in 2005, the company aims to create a professionally managed, large-scale dairy farming company that would meet the public’s demand for safe and high-quality milk.

“The increase of Mengniu’s stake in Modern Dairy is to secure both quality and quantity of raw milk sources, as well as to further capitalise on our competitive edge in high-end milk source, said  its CEO Ms Sun Yiping. “Meanwhile, accelerating and expanding investments in quality farms will allow Mengniu to establish a safer and more stable value chain in the dairy sector, to provide healthier and better quality dairy products to consumers.”

China’s dairy farming industry is still overall fragmented and under-developed, but leading players like Modern Dairy which follows international best practices with strict controls through the entire manufacturing process helps upgrade food safety of dairy products for consumers in China. Modern Dairy is currently the largest raw milk supplier to Mengniu, operating 22 large –scale dairy farms across China with a geographic footprint that coincides with Mengniu’s processing facilities.

“Modern Dairy under the leadership of the current management team grew the business successfully ovadidas