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May 7, 2019

China’s Henan Kedi Dairy to buy frozen-food sister firm

China's Henan Kedi Dairy plans to buy an associated autonomous company Henan Kedi Quick Frozen Food Co.

China’s Henan Kedi Dairy has notified its shareholders it plans to buy an associated autonomous company Henan Kedi Quick Frozen Food Co. for a tentatively set transaction price of CNY1.48bn (US$221.3m) via share issue.

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The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
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Henan Kedi Quick Frozen specializes in the production and sale of quick-frozen pasta, meat and specialty vegetables.

Both companies are part of the Kedi Group, a holding consisting of the four independent working companies Kedi Dairy, Kedi Quick Frozen, Kedi Flour and Kedi Bio-engineering.

The shareholders’ notification does not include the purpose of the deal, although experts say the integration of the companies will give the combined entity more financial muscle.

The China Business Daily newspaper quoted Song Liang, a dairy expert at China’s ministry of commerce, as commenting on the announcement that regional dairy enterprises, such as Kedi, are facing strong competitive pressure from both the leading domestic dairy companies and foreign peers. And they need more financial resources to grab market share.

“Many small-scale regional dairy companies, including Kedi Dairy, have no strength to carry out product R&D and marketing,” Song said.

“In the future, leading dairy enterprises will further integrate regional dairy enterprises, and cross-regional mergers and acquisitions are inevitable,” he added.

Peter Peverelli, founder of Netherlands-based Eurasia Consult and an expert on Chinese food industries, agreed the takeover is an internal financial move, rather than a strategic move into a new type of business.

Nevertheless, he sees the Kedi Group as an interesting business case, predicting that this relatively small player could build up a stronger profile in future.

“In my monitoring of the Chinese food news, it has kept popping up every now and then with positive growth figures, a successful new product launch, and so on,” Peverelli said.

“It is not a leader in any of its product groups, but it has been growing steadily, firmly rooted in the local economy, supported by the local authorities,” he added.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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