Dive Brief:
- Danone will spend about $550 million to acquire a 25% stake in China's Yashili International Holdings.
- The move represents a deeper commitment to China's booming market in infant formula by the dairy company, which has seen sales of its Dumex brand fall in recent months amid growing competition.
- Danone already owns a 10% stake in China Mengniu Dairy, which in turn owns 75% of Yashili.
Dive Insight:
The Danone-Mengniu-Yashili combination is a complicated one. It will likely be some time before the dust settles in the inevitable fights over which brands will get the most corporate attention and marketing commitment. This isn't about to calm down anytime soon. At the same time that Danone was announcing its investment, the Chinese government was lifting a ban on sales of infant formula powders from New Zealand's Fonterra Co-operative, which was the focus of a false alarm recall last year that threw the market into chaos.