Freedom Foods Group is to invest in Shenzhen JiaLiLe Food Co., one of the Australian dairy-to-cereal group’s partners in China, in a bid to expand the presence of its children’s milk brand Australia’s Own in the country.
The two companies launched Australia’s Own in China last year in provinces including in Hunan, Zhejiang, and Jiangsu, in the south and east of the country.
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Freedom Foods today (5 October) a “memorandum of understanding” between the groups that would see the creation of a new business, Australia’s Own Dairy Company China, or AO China. Under the plans, the new entity, AO China would run Shenzhen JiaLiLe Food Co.’s operations in the country and “provide a stronger strategic link between brand operations in China and supply and processing in Australia”, Freedom Foods said. AO China is expected to be up and running “from early 2017” subject to the finalisation of the plans, it added.
Freedom Foods plans to pay CNY22m for a 10% stake in AO China. It will be represented on the AO China board and has an option to take its shareholding up to 30% within three years. The companies also plan to “potentially seek a listing on an international stock exchange” for AO China “in the medium term”, the Australian group said.
Reflecting on the performance of the Australia’s Own brand in China so far, Freedom Foods said: “Volumes developed throughout the 2015 calendar year, with a strong momentum into early 2016, as the product started to gain acceptance with consumers, particularly in large-format retail supermarkets in the key provinces targeted. With significant ongoing marketing investment, including point-of-sale promotion, sampling and sponsorship of leading children’s TV programmes, the growth trajectory has continued into the 2016 calendar year, with the product now becoming the largest imported kids’ milk brand in China.”
Freedom Foods forecast there would be “a significant increase in demand” for the product after this year and it plans to add to the production capacity of its plant in Ingleburn in Australia.
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