Arla Foods has insisted there is “no conflict” between its venture with Mengniu and the Chinese dairy’s planned new partnership with Danone.
Mengniu is set to team up with a second European dairy giant after announcing plans for a yoghurt venture in China with Danone.
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Arla has worked with Mengniu since 2005, primarily selling powdered milk. However, last year, the two companies deepened their association. Arla became a shareholder in Mengniu and the dairy processors said they would work together to sell a “full range of dairy products in China”.
In a two-part deal, Danone will combine its yoghurt assets in China with those of Mengniu, which is the largest player in the sector. The French food giant will also take an indirect stake in Mengniu.
However, Arla said Mengniu would work with the two companies in different parts of the dairy sector.
“There’s no conflict of interest because they are concentrating on fresh yoghurt. That’s category that we don’t have any intention of being in,” a spokesperson for Arla said. “Also, our focus in China is not on locally produced products but importing in high-quality products from our Europe – butter, cheese and UHT milk.”
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By GlobalDataThe spokesperson said the venture between Danone and Mengniu would enhance standards in China’s dairy sector.
“It will improve the quality of locally-produced dairy products in China,” the spokesperson said.
Announcing their deeper partnership last year, Arla and Mengniu said they would work together on issues like farm production, milk quality and traceability. “We do work closely with Mengniu to share our expertise and knowledge in food safety for example,” the Arla spokesperson said today. Mengniu’s venture with Danone, he said, would reinforce that work.
