Nestle milk powder hairpin: rumored to buy Mead Johnson and Wyeth milk powder

"The case of Nestle's acquisition of 60% equity in Xiamen Yinlu Food Group Co., Ltd. has passed an anti-monopoly investigation by the Ministry of Commerce. Nestlé's acquisition of Xu Fuji has officially entered the Chinese Ministry of Commerce's filing procedure and will be conducted in accordance with the "Anti-Monopoly Law." The review is still very hopeful,” said Roland Decorvet, Chairman and CEO of Greater China, Nestle China Ltd., at the 60th Anniversary of the University of International Business and Economics. "In the future, Nestle will have more acquisition plans in the Chinese market."

National brand gradually eroded

On the 60th Anniversary of the University of International Business and Economics hosted by the University of International Business and Economics under the theme of “New Economy and New Coordinates”, Roland Decorvet also deliberately emphasized the launch of a series of acquisitions and deployment activities in China, deepening its presence in China. The importance of advancing localization strategies.

It is reported that last year, Nestle's sales in China grew by nearly 15 to 20.4 billion yuan, accounting for only 2.55% of Nestlé's global share. According to the previous plan of Nestle CEO Paul Balk, Nestlé intends to realize the emerging countries market in 2020, the contribution rate of Nestle Group's operating income reached 45%, while the current figure is only 31%. To expand the pace of development, the purchase of local brands with huge market growth potential is a quicker alternative than simply setting up factories or expanding production.

Acquired 80% equity of Shanghai Taitai Le from acquisition peak, acquired 97% equity of Guangzhou Wuyang, acquired 60% equity of Haoji, monopolized the Chinese chicken market and acquired 70% equity of Yunnan Dashan last year. This year it was intended 11.1 billion. Yuan acquires 60 percent of Xu Fuji’s shares. Nestlé’s acquisition of 60% of Yinlu’s shares is approved by the Ministry of Commerce. The gap between Mengniu’s sales of over 30 billion yuan last year and Yili’s sales of 29.6 billion yuan will further narrow in recent years. Nestlé has been eroding Chinese national brands with its huge capital.

New acquisition rumors rekindled

According to foreign media reports, Nestlé spent a total of 11.4 billion U.S. dollars in acquisitions in the past 14 months. Although this year's revenue is expected to decline, the appreciation of the Swiss franc is making Nestle's acquisition costs unprecedentedly low. At present, Mead Johnson, the world's largest infant milk powder company, may have been included in its acquisition. Euromonitor International expects that after Nestlé’s acquisition of Mead Johnson, its share of the baby food market in the United States will exceed half. The acquisition of Mead Johnson will help Nestlé resume its growth, and it will occupy a strong position in the Chinese market, which is the only large-scale market that has not yet occupied the major market share of baby milk powder.

In the Chinese market, starting in August, the domestic market also rumors that Nestlé may hold Wyeth milk powder with US$10 billion in funds. Since the Sanlu milk powder incident in Hebei, this will be the largest purchase event in the domestic milk powder industry if two acquisition plans are made. Upon completion, Nestlé and Danone will gradually monopolize the Chinese milk powder market. The Chinese national brands of milk powder companies will be squeezed into corners and gradually die.

Chen Lianfang, an Oriental dairy analyst with AIG, believes that the acquisition of Nestlé was too fast and signed a cooperation agreement in the next two weeks. It shows that Nestlé has a long-term arrangement for the acquisition plan. Currently, Nestlé’s empire has covered more than a dozen food segments such as milk powder, liquid milk, instant coffee, candy, drinking water, sweetened condensed milk, breakfast cereals, chicken and seasonings.

Some analysts pointed out that the acquisition of Xu Fuji by Nestlé involves a large amount of money and is one of the largest cases of foreign companies acquiring foreign companies in recent years. If the Ministry of Commerce rejects Nestle’s acquisition plan, it may become a weapon that Nestle will temporarily erode Chinese national brands.