HongShan-backed Junlebao Dairy Group is picking up a 30% stake in More Yogurt, one of the country’s most popular chains for fresh yoghurt drinks, according to a company statement on Thursday.
Junlebao, which claims to be the largest dairy processor in the Hebei Province, did not divulge the financial details of the transactions. Alongside the capital injection, the dairy processor will partner with More Yogurt in the areas of dairy ingredients supply, new product R&D, food safety, and business management.
Freshly made yoghurt drinks have become popular in recent years in China’s yoghurt market, which has long been dominated by room-temperature and low-temperature yoghurt drinks. More Yogurt has grown to over 1,600 physical stores across the country since its inception in 2014, with two-thirds of its stores located in tier-one and tier-two cities.
Most recently, More Yogurt joined a slew of Chinese consumer brands like ice cream and tea chain Mixue Bingcheng to make a foray into Hong Kong. Hillhouse Capital Group-backed Mixue Bingcheng, is set to open its first store ahead of an initial public offering (IPO) in the city.
Chinese consumers have increasingly sought healthier and better-quality products, which explains the country’s craze for new-style tea drinks giving rise to brands like HeyTea and Nayuki.
In July, More Yogurt was embroiled in a controversy when some netizens alleged that the firm uses non-dairy creamer—an artificial milk substitute that contains trans fat—as the base of its yoghurt drinks and questioned if that justified the high prices of their products. More Yogurt denied the accusations in a release dated August 4, adding that the firm will “upgrade” the formula of its drinks by using milk powder from August 1.
Building up consumer trust remains one of the most crucial issues in the country’s dairy industry, especially after the melamine baby milk tragedy of 2008 where around 300,000 children were poisoned, and several died, after drinking adulterated infant milk formula that contained melamine, a chemical used in plastic.
Chinese consumers highly value transparency and are all ready to take down those brands they perceive to be dishonest. It is crucial to practice extra care when acting in this environment, as the greatest success might always quickly become the worst failure,” local market research company Daxue Consulting wrote in a report on China’s yoghurt market opportunity on October 5.