New joint venture with top dairy company
A joint venture agreement with China’s leading dairy company heralds the start of a new enterprise for Arla Foods on the world’s largest market for retail milk powder products. The joint venture will produce milk powder for the adult and growing up sectors in China, Hong Kong and Macau.
Arla Foods Ingredients’ partner is China Mengniu Dairy Company, located at the heart of Inner Mongolia’s important dairy centre. Established in 1999, China Dairy has undergone a meteoric rise to become the number one supplier of liquid milk products in China. A new plant has also been built to accommodate growing milk powder sales. In addition, the company has the world’s biggest UHT plant and Asia’s biggest ice cream plant and plans to build Asia’s biggest yogurt plant.
Executive director Jais Valeur says the investment in China is in line with Arla Foods’ strategy to develop its already strong position within the retail milk powder sector. Our aim is to capture a share of the growing Chinese market and, at the same time, prepare Arla Foods for the further deregulation of the European dairy industry.
Project manager Lillie Li Ekhard has led the effort find a suitable joint venture partner to realise Arla Foods’ strategy.
Mengniu and Arla Foods are an excellent match. Mengniu has a strong national sales and distribution set up covering the 400 most important cities in China and access to sufficient quantities of inexpensive raw milk, she says. Arla Foods contributes an international milk powder brand, production capacity, and marketing and R&D competences.
Arla Foods will also appoint the management team for the joint venture.

Milk powder partners. Mengniu and Arla Foods are an excellent match, says project manager Lillie Li Ekhard.

Although the number of dairy cattle in China has risen by more than 500% over the past 20 years, China is not self-sufficient in milk. Imports of dairy products are expected to undergo considerable growth in the years ahead.