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Lion Asia Dairy agrees significant distribution partnership in Southern China

14 October 2015: Lion Asia Dairy today announced a significant new distribution partnership with the leading fresh milk processor and distributor in Southern China, Canton American Flower Lounge Livestock Co. Ltd (Flower Lounge), a subsidiary of the Hong Kong-based Lark International Group.

The new partnership will see Flower Lounge import, market and distribute a range of Lion’s branded Australian dairy products across the Guangdong Province, which contains China’s most populous city, Guangzhou, as well as the Fujian, Hunan, Jiangxi and Hainan Provinces.

Guangdong is more than four times the size of Australia in population terms, with 104 million people, around the same size as Mexico.

Flower Lounge will market Pura extended shelf-life (ESL) and UHT milks and fresh Dairy Farmers Thick & Creamy and Farmers Union Natural Greek Style yoghurts, along with a selection of Lion’s Australian specialty cheese brands.

Lion Asia Dairy Managing Director, Duncan Makeig, said: “We’re absolutely delighted to agree a partnership with Flower Lounge which has proven to be a market leader in fresh dairy in Southern China.

“Flower Lounge offers a great platform unique for our quality Australian dairy brands to be distributed into South China. It has achieved market-leading sales coverage in all channels, including chain supermarkets, hotels, wholesalers and smaller family owned-stores.

“Most importantly, Flower Lounge manages a well-developed cold chain distribution network and boasts high quality and safety standards. It is extremely exciting for us and it makes absolute sense for Australia’s leading branded dairy company to partner with a leading fresh milk processor and distributor in South China,” Mr Makeig said.

While Lion has been active in Asian markets for a number of years and has built a strong reputation for being the number one yoghurt player in Singapore with 26% total market share[1], it recently established a dedicated business unit to focus on the Asian growth opportunity.

“Lion Asia Dairy has always been a patient, long-term brand building play and we’re not getting ahead of ourselves. Our strategy is to take premium brands with strong Australian provenance into select Asian markets,” Mr Makeig said.

“We will build on the existing partnerships we already have in China and across South East Asia.” He said.

“Building brands takes time, sustained investment and local market know-how. We recognise that we can’t do it alone and we’re focused on finding the right local partners to help our brands reach their potential in Asia. This is a significant step in establishing a meaningful presence in Southern China.”

During the past year, Lion Asia Dairy has been focused on establishing partnerships in China capable of driving large-scale distribution with high quality credentials.

This latest partnership arrangement will complement Lion Asia Dairy’s current footprint in China. The business already distributes Pura ESL and Pura UHT products through Goodwell in Eastern China and Dairy Farmers UHT products across China through CR Ng Fung. To date, Lion’s UHT products are available in around 2500 supermarkets, while ESL products are available in more than 300 premium supermarkets.

For further information, please contact:

Elise Gare

External Relations Director, Lion Dairy and Drinks

Tel:        +61 3 9188 6177

Mob:     +61 437 306 437

E-mail:  elise.gare@lionco.com

 

Notes to editors
The Opportunity for branded Australian Dairy in Guangdong

With significant growth in the Chinese middle class, interest in Australian branded dairy products has increased substantially. By 2017, demand for milk in China is expected to exceed domestic production capacity by 17 billion litres.[2] Put into context, Australia’s total annual production is around 9 billion litres.

In population terms, Guangdong is more than four times the size of Australia and on a par with Mexico. In terms of nominal gross domestic product, it is China’s largest province at around US$1.1bn, close to Australia’s $1.4bn.

Guangdong’s largest city, Guangzhou, which on some measures is home to as many as 44 million people, is a significant port offering access to Southern China.

About Lion Asia Dairy

Lion Asia Dairy was established in 2014 as a dedicated business unit to focus on the growth of Lion’s Australian branded dairy products in Asia.

Lion Asia Dairy aims to leverage Lion’s established Australian dairy brands, innovation capability, expertise in nutrition and dairy beverages and foods and Australian provenance to build sustainable positions in select Asian markets.

Its strategy is to partner with leading businesses in key markets across Asia, also leveraging owner Kirin’s extensive network of Asian contacts. Lion is committed to a patient growth strategy to build enduring positions in white milk, flavoured milk, yoghurt and specialty cheese. As a branded dairy business Lion Asia Dairy does not intend to play at the commodity end of the market.

Dairy Farmers Thick & Creamy is the leading imported yoghurt brand in Singapore and Yoplait is the leading premium yoghurt brand in Hong Kong. Lion Asia Dairy launched Dairy Farmers UHT and Pura UHT and extended shelf life (ESL) milk into China late in 2014. To date, Lion’s UHT products are available in around 2500 supermarkets and its ESL products are available in more than 300 premium supermarkets.

About Canton American Flower Lounge

Canton American Flower Lounge (Flower Lounge) was established in 1982 as a joint venture between Lark International Group’s American founder, Mr Ira Kaye, and China's Agricultural Industry Development Co., Ltd.

In 1983, Flower Lounge established what has become the largest dairy farm and dairy processing facility in South China boasting a 35 percent share of fresh milk sales across South China and selling almost half the fresh milk consumed in Guangzhou.

Between 1984 and 1985, 810 superior dairy cattle from the United States and Canada arrived in Guangzhou by plane and settled in Flower Lounge farm. This is the origin meaning of the Flower Lounge ‘flying cow’ logo and set Flower Lounge on a path of producing quality fresh milk in South China.

Flower Lounge markets a range of fresh dairy products including white milk, flavoured milk and yoghurt across Guangzhou under the Flower Fresh and Fresh’N Healthy brands.

In 1989, the business transformed from a joint venture enterprise to a wholly-owned subsidiary of Lark International Group.

Flower Lounge has won several titles as "Guangdong's high-quality dairy enterprise" and for owning "the most popular dairy brands". Reflecting its status as a quality leader in China, it was the first Chinese enterprise to establish a "non-antibiotics" standard and to adopt full closed piping dairy processing technology.

 


[1] Nielsen, 2014 Modern Trade scan data

[2] Dairy Dales, Euromonitor, 2015