Blog: Dean BestChina's Yili breaks new ground for emerging market dairies

Dean Best | 10 July 2014

The boom in demand for dairy products in emerging markets has been underlined by the latest data on the largest companies in the industry.

Agrifood analysts Rabobank has published its annual poll of the world's top 20 dairy companies by sales. The identity of the 20 companies is the same as last year and the top seven slots are filled with the same groups as 12 months ago - but Chinese group Yili has entered the top ten after seeing sales jump in 2013.

Yili moved from 12 to ten after its turnover increased 14% to US$7.6bn, Rabobank said.

The company was helped by its deal late in 2012 to buy New Zealand firm Oceania Dairy Group but it also gained market share in China's expanding dairy market. It said halfway through 2013 it had benefited from safety-conscious Chinese consumers focusing more on product quality.

In the last year, Yili also signalled its readiness to team up with overseas players and increase its exposure to dairy expertise in international markets.

Yili signed plans for a strategic alliance with US co-op Dairy Farmers of America and a similar deal with Italian peer Sterilgarda Alimenti.

That desire for international know-how was underlined in February this year when Yili opened a research and development centre in the Netherlands in partnership with Wageningen University.

And in recent months, there have been two notable pieces of news surrounding Yili that indicate it could be set for further growth.

In October, the Chinese government named Yili as one of six "national champion companies" it would support to spearhead Beijing's drive for more M&A in the infant formula sector.

And, last month, Yili secured investment in a breeding subsidiary from two Chinese private-equity firms, one co-founded by Alibaba chairman Jack Ma.

The world's leading dairy companies continue to eye China's buoyant demand for dairy but face intense competition from domestic players like Yili, which is showing no signs of letting up in its plans for further growth.

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