This column is jointly published by Digital Chain Space and Shanghai Changning Sino-German Industry Promotion Center (SSGIC). Each issue will bring a German hidden champion and, on this basis, an extended analysis of the industry in which the company operates.
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Hidden champion of dairy processing
In Europe, especially in Germany, there are many hidden champions. These companies may not be large in scale and cannot be said to be household names, but they are all leaders in their respective market segments and occupy one of the top positions in the market segments. In the "Hidden Champions" section, we will take you to know some "little-known" German hidden champions.
Basic information
Company Name: GEA Group Aktiengesellschaft
Headquarters Address: Peter-Müller-Str. 12, 40468 Düsseldorf, Germany
Founded: 1881
Main products: Solutions for food processing systems
Revenue: €4,635 million (2020)
Number of employees: 18232 (2020)
Company official website: www.gea.com
Global presence
GEA has more than 300 production sites worldwide in many countries in Europe, Asia, the Americas and Africa.
GEA currently operates nine production sites in China
- The headquarters of the China business is located in Shanghai;
- Other production bases are located in Beijing, Dalian, Liaoning, Guangzhou, Hong Kong New Territories, Hebei Shijiazhuang, Jiangsu Suzhou, Taiwan Taipei, and Tianjin.
Main business and products
- Separation and Flow Technology Division: This business unit consists mainly of GEA's process technology components and machines, which form the core of many production processes, mainly producing separators, decanters, homogenizers, valves and pumps;
- Liquid and Powder Technology Division: This business unit offers processing solutions primarily for the dairy, food and beverage industries and the chemical industry. The product portfolio includes processing and filling of liquids as well as concentration, crystallization, cleaning, drying, powder processing and filling, and emission control systems;
- Food & Healthcare Technology Segment: Solutions for food processing, including segments such as preparation, pickling and further processing of meat, poultry, seafood and vegetarian products. Equipment and systems for the treatment of solid, liquid, semi-solid, viscous and hygroscopic products are available for batch and continuous production.
- Farm Technology Division: Integrated customer solutions for efficient and high-quality milk production and livestock, including automated milking and feeding systems, traditional milking solutions, milk cooling and storage, well-designed stabilization equipment and digital herd management tools;
- Heating and Refrigeration Technology Segment: Providing sustainable energy solutions for a wide range of industries, including the food and beverage industry, the dairy industry, and the oil and gas industry, proven technologies with reliability, economy, sustainability and long life cycles, so that total operating costs can be kept low.
▌Content source: Sino-German Center | China-EU industrial cooperation
Public account tweet "Hidden Champions|001 GEA Group (Kiye)
Dairy industry extension research analysis
Domestic dairy consumer market industry observation:
According to the National Bureau of Statistics, the national dairy output in 2020 was 27.804 million tons, +2.2% year-on-year (the national dairy output from January to September 2021 was 22.545 million tons, +10.6% year-on-year). According to Euromonitor data, the size of China's dairy market in 2020 is 414.62 billion yuan, a year-on-year -0.8%, and it is expected that by 2025, the size of China's dairy market will reach 550.83 billion yuan, and the CAGR will be 5.2% in 2021-2025. In recent years, except for a few years, such as the negative average price growth rate affected by the epidemic in 2020 and the decline in the growth rate of output due to upstream supply problems in 2018, the remaining years have mostly been positive growth, achieving a simultaneous increase in volume and price.
According to Yili annual report, the market penetration rate of Yili ambient liquid dairy products in 2020 is 84.7%, and the future industry growth mainly depends on product structure upgrading and consumption frequency improvement. Under the normal temperature business model, the national leading enterprises have obvious scale and channel advantages. According to Euromonitor data, in the top three of ambient liquid milk in 2020, Yili, Mengniu and Guangming accounted for 37.8%, 27.2% and 8.2% respectively, and the two national dairy enterprises of Yili and Mengniu continued to harvest the share of small and medium-sized enterprises, and the situation of competition between the two oligarchs was not easy to break in the short term.
M&A cases related to the dairy industry:
China's dairy industry's largest merger in recent years Yili 6.245 billion Hong Kong dollars into Ausnutria
With a transaction price of HK$6.245 billion, China Dairy's largest merger and acquisition in recent years landed on October 27, and dairy leader Yili Shares strategically acquired a strategic stake in goat milk powder giant Ausnutria Dairy and became its largest shareholder. Yili shares announced that it intends to further strengthen the field of infant formula milk powder and nutritious food through the strategic investment of Ausnutria Dairy through its wholly-owned subsidiary, Hong Kong Goldenport Trading Holdings Limited (hereinafter referred to as "Goldenport Holdings").
According to the announcement, Goldenport Holdings will purchase 531 million shares of Ausnutria held by the original shareholders at a price of HK$10.06 per share, accounting for 30.89% of the total share capital. In addition, Ausnutria Dairy will also issue 0.9 billion new shares to Goldenport Holdings at a price of HK$10.06 per share. After the completion of the transaction, Goldenport Holdings held 621 million shares of Ausnutria, accounting for 34.33% of the issued share capital of Ausnutria and became its single largest shareholder.
The "post-100 billion era" of the big hand
At the signing ceremony of the strategic cooperation between Yili Group and Ausnutria Dairy, Pan Gang, chairman of Yili Group, said: "In the future, Yili will give full play to its advantages in scale, brand, channel, industrial chain, etc., empower the long-term healthy development of Ausnutria, and work with Ausnutria to develop a new pattern and new possibilities in the milk powder, dairy products and even health food industry. ”
Yili's optimism about Ausnutria Dairy is also related to its layout in the milk powder market in recent years.
Yili sees the milk powder business as a new growth pole. "The market share is second in 2022 and the industry is the first in 2025." This is the goal that Yili shouted for the milk powder business at the recent investor exchange meeting. Yili stressed that in order to achieve this ambitious goal, in the next five years, the compound annual growth rate should reach 20%, and the growth rate of the milk powder division should reach more than 30%.
However, it is a fact that due to the continuous decline in the number of newborns, the infant formula market has entered the stage of stock competition, and high-end products with better profits and market development prospects have become the key to the breakthrough of dairy enterprises.
It is foreseeable that working with goat milk powder giant Ausnutria will undoubtedly provide a strong blessing for the development of Yili's milk powder business. According to the 2020 financial report, Yili milk powder and dairy products revenue was 12.885 billion yuan, an increase of 28.15% year-on-year. According to Nielsen data, the market share of Yili infant formula is about 6%. In the same year, the overall sales of Ausnutria free brand infant formula milk powder was 6.926 billion yuan, and the joint efforts of the two parties will undoubtedly further enhance the market share of Yili infant formula milk powder.
Yili's successful acquisition of Ausnutria Dairy will achieve a curve overtaking in the layout of its milk powder business, so that Yili's milk powder business will directly enter the top two from the past three; at the same time, Ausnutria Dairy's overseas resources and channels can also play a systematic role with Yili's existing layout. From the perspective of positioning, the positioning of Ausnutria Dairy's milk powder focuses on high-end and ultra-high-end products, which can further supplement the Yili milk powder product line.
Ausnutria remains independent
The announcement shows that after the completion of the transaction and closing, Yili will continue to support the independent operation of Ausnutria and maintain the listing status of Ausnutria in the Hong Kong capital market, and the existing operations and businesses of Ausnutria will not make any major changes. Yili will help Ausnutria improve its long-term business development plans and strategies, give full play to the synergy effect between the two sides, and promote the more sustainable and healthy development of Ausnutria.
Through Yili's strong channel power, brand power, and overall comprehensive strength, Ausnutria can further consolidate its own goat milk powder advantages, and milk powder can also be developed at a high speed.
In addition, yili and Ausnutria's overseas strategy also have a certain tacit understanding. Yili's acquisition of Ausnutria may also have the intention of completing its overseas resources and channel layout. Previously, Yili's overseas industry and resource layout was more focused on Southeast Asia and New Zealand, while Ausnutria's layout in Europe was more perfect.
The milk powder market pattern is changing
In the announcement released by Yili Shares, it was mentioned that the transaction will lead to Ausnutria becoming an associated enterprise or holding subsidiary of Yili, and it is expected to bring certain investment income or operating income and profit contribution to Yili in the future.
According to the 2020 financial report, Yili milk powder and dairy products revenue was 12.885 billion yuan, an increase of 28.15% year-on-year. According to Nielsen data, the market share of Yili baby powder retail sales is about 6%. In the same year, the overall sales of Ausnutria's own brand infant formula milk powder was 6.926 billion yuan, and the revenue of Feihe infant formula milk powder products was 17.673 billion yuan. Based on this calculation, Yili and Ausnutria will further expand the overall scale.
After the cooperation between the two, the scale should be close to 18 billion yuan, and after integration, it will become the second largest brand of milk powder in China, which is very important for Yili's milk powder business strategic goals, and there are also certain changes to the brand pattern of the original milk powder market.