Huiyuan launches 130 million yuan bid for dairy business

China Huiyuan Juice Group Ltd., China's domestic juice giant, announced Tuesday that they had taken over 130 million yuan in dairy-related assets from Shandong Zibo Huiyuan Food & Beverage Co., another food company owned by Huiyuan's president Zhu Xinli, the Beijing Times reported.

Meanwhile, Huiyuan Juice Group has agreed to pay 150 million yuan to buy assets of dairy bottle production from a company also run by Zhu Xinli.

Insiders believe that these bids are part of Huiyuan's asset integration aiming to reap profits in the dairy industry.

This is not Huiyuan's first venture into the dairy industry. As early as 2003, Huiyuan had spent 100 million yuan launching dairy businesses in Beijing that would generate 50 million yuan in income in the first year. However, consumers hardly even saw Huiyuan's dairy products on the market and Huiyuan's department running the dairy business later switched to other fields.

It seems that the failure of Coca Cola's Huiyuan bid earlier this year and the dairy industry's structural reforms trigged by the Sanlu case offered Huiyuan a chance to start over in the dairy industry.

As to Huiyuan's dairy products, insiders believe that pure milk will not be Huiyuan's focus. Huiyuan is more likely to develop commodities that combine milk and juice together, considering their advantages in juice production. Besides, the construction of milk source base and products flavor will be key issues in whether the company can win a market share.