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May 13, 2020

The Coca-Cola Co. gets green light for China chilled-milk JV

The Coca-Cola Co. is to launch a chilled milk brand in China after agreeing a joint venture with one of the country's largest dairy companies.

The Coca-Cola Co. is to launch a chilled milk brand in China after agreeing a joint venture with China Mengniu Dairy Co., one of the country’s largest dairy companies.

The US soft drinks maker said today it has obtained clearance from Chinese authorities to set up a venture with Mengniu to produce and sell chilled milk in the country. Financial details, and the name of the new milk brand, were not disclosed.

“The new joint venture will make full use of the advantages of both parties, including dairy development and processing techniques, brand influence and distribution channels,” a Coca-Cola spokesperson said. “By creating a new chilled milk brand for Chinese consumers, it will enable them to upgrade their dairy consumption.”

Coca-Cola has ventured into a number of new categories in recent years under a “total beverage company” platform led by CEO James Quincey. The group already produces milk drinks under its US Fairlife dairy business, which it took full ownership of this year.

According to GlobalData, the Inner Mongolia-based Mengniu is China’s biggest dairy company with a 20% share of the market in 2018. Milk products in the country had a market value of CNY139bn (US$19.6bn) in 2018, and are expected to grow by 4% a year to 2023.

In February, Mengniu secured regulatory clearance in Australia to acquire local business Lion Dairy & Drinks. Last November, it was announced Lion Dairy & Drinks, part of the Australian food and drinks business owned by Japan’s Kirin Holdings, was to be sold to China Mengniu for AUD600m (US$407.5m then), pending approval.

And last year, the Chinese dairy firm acquired Australia-based infant-formula maker Bellamy’s Australia.

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