Coca-Cola moves into chilled milk production through partnership with Mengniu

Global soft drink giant, Coca-Cola Co has recently announced a joint venture with China’s leading dairy group, China Mengniu Dairy Co to produce and sell chilled milk in China.
Coca-Cola said the partnership is a reaffirmation of its long-term commitment to the Chinese market and will look to tap Chinese consumers’ growing interest for value-added and better-tasting dairy products.
The joint venture seeks to capitalise on the advantages of both companies, including in dairy development and processing techniques, brand influence and distribution channels.
A Coca-Cola spokesperson said, “Creating a new chilled milk brand for Chinese consumers will enable them to upgrade their dairy consumption. The partnership will support Coca-Cola China’s evolution into a total beverage company, providing an enriched portfolio of consumer-centric beverage offerings and demonstrating its long-term commitment to the China market.”
Coca-Cola is actively diversifying its portfolio. In January 2020, it had added Chicago-based Fairlife – an innovative and value-added dairy brand to its portfolio. Fairlife CEO Tim Doelman had said that the increased investment will allow it to further innovate and branch out into other dairy segments.
Industry analysts have identified the chilled milk sector as an area where beverage and dairy producers have competed fiercely for market share.
In China, Mengniu and Yili currently dominate the UHT milk segment in China. This segment commanded more than 88% of family milk purchases in the country, according to latest research by Kantar Worldpanel. At present, chilled milk is purchased by only 29% of Chinese families, and therey translate to huge growth potential.
The current COVID-19 pandemic has further boosted consumer interest in dairy products, particularly those with high-quality protein and other added-value functions. In addition, rapid growth of new retail channels such as Hema and emerging fresh food apps will further help the development of chilled milk, said a Kantar Worldpanel spokesperson.
Meanwhile, Mengniu’s regional farming resources and distribution channels are expected to benefit from the new joint venture. By the end of 2019, Mengniu’s fresh milk brands Shiny Meadow and Modern Meadow, also its youngest business segment, had expanded into 24 provincial-level regions and 50 major cities in the country. Sales of its chilled yogurt maintained single-digit growth and took the top position in the industry.