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The owners of a major dairy company in China, primarily known for producing yogurt, have agreed to sell the business to a local investment firm after experiencing a post-pandemic rebound in profits amid intense local competition.
Tiantu Capital is set to sell its 45.22% stake in the company to Kunshan Nuoyuan Ruiyuan Management Consulting for nearly 814 million RMB (about $115 million). The Shenzhen-based venture capital firm announced the deal on December 1st, noting that the sale will result in a loss of approximately 847,000 RMB ($120,000).
The remaining shareholders, holding a combined 41.74% stake, will also sell their holdings entirely for 751 million RMB, bringing the total deal value to around 1.8 billion RMB.
Tiantu Capital acquired its stake in 2019, though the purchase price was not publicly disclosed. The firm stated that this sale will help realize investment gains and meet its exit obligations for the funds it manages.
At the time of purchase, the company was enjoying peak earnings; however, due to the COVID-19 pandemic and increased competition from domestic brands, it suffered losses nearing 200 million RMB between 2020 and 2022. Nevertheless, as demand for chilled yogurt rebounded, the company posted a profit of 8.4 million RMB in 2023 and 95.5 million RMB last year.
The yogurt market has remained subdued since the pandemic, particularly in the premium segment, and the company’s market share has been gradually declining, according to independent dairy analyst Song Liang.
With stiff competition from local dairy brands and popular new yogurt startups, Song considers this sale a well-timed strategic move for the company.
Kunshan Nuoyuan Ruiyuan is partly controlled by IDG Capital, according to business data platform Qichacha. Founded in 1993, IDG invests across sectors such as consumer technology, healthcare, and general consumer markets, with a portfolio that includes companies like Three Squirrels, Xiaomi, and Pinduoduo.
The rise of Chinese consumer brands over recent years has put increasing pressure on international players, Song noted, adding that it remains to be seen how IDG will manage its new acquisition.
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