Yili to take control of Thai ice cream maker Chomthana

Chinese customer shops for a carton of Yili pure milk at a supermarket in Xuchang city, Central China's Hunan province, on Nov 16, 2014. [Photo/IC]

Dairy products maker Inner Mongolia Yili Industrial Group Co Ltd is planning to buy a 96.46 percent stake in Thailand-based ice cream and frozen foods manufacturer the Chomthana Co Ltd for $80.56 million to further expand its reach in the Southeast Asian markets.

Chomthana Group, which also operates cold-chain logistics, has a nationwide distribution network in Thailand and its ice cream products are available in 13 countries and regions.

According to Yili Chairman Pan Gang, the move is part of the Chinese firm's efforts to provide the best global resources and innovations to its customers. It will also level up the local ice-cream market in Thailand and meet the growing demand for high-end products from local consumers.

With abundant and diversified fruit supply, Chomthana has strengths in tropical flavor ice-creams. Soh Chee Yong, president of Chomthana, said they have focused on creating products with distinct flavors in the Asian market.

Yili, one of the largest and diversified dairy producers in China, has grown rapidly this year. During the third quarter, the company attained a revenue of 61.3 billion yuan ($8.83 billion), up 16.88 percent year-on-year, while net profit was 5.05 billion yuan.

By the end of August, Yili liquid milk had a market share of 37.6 percent in the offline retail channels.

According to Yili, the collaboration between the two sides is not just an equity deal. Both sides will share professional standards, technology knowhow, professionals and management experience with each other for the further development of the dairy industry, according to Yili.

To facilitate its global expansion objectives, Yili has set up an international department based in Shanghai. In October this year, Yili launched 11 new products targeting the Southeast Asian market.

"The launch of Joyday icecream products marked our entry into Southeast Asia and we look forward to providing quality products to new markets", Zhang Jianqiu, executive president of Yili, said in October.

The company had previously revealed its plans to make its products available to 2 billion consumers by 2020.

Song Liang, a senior dairy industry insider, said the best option for Chinese dairy firms in going-global is the Southeast Asian market, where consumption upgrades and growth are still strong.

Chen Yu, an independent dairy expert, said the acquisition is a major global stride for the Chinese dairy industry. Chen said with increasing supply side pressures from home and abroad, it is important for Yili to build up an international business centered on innovation and sharing of professional knowledge and resources.

Another leading Chinese dairy producer China Mengniu Dairy has also been making moves in the Southeast Asian markets.

On Thursday, Mengniu opened its new Mengniu YoyiC Dairy Factory in Cikarang, Indonesia.

It is the Chinese dairy company's second overseas dairy processing facility after one in New Zealand.