Mengniu Dairy considers sale of Aice Ice-Cream brand

CHINA – Mengniu Dairy, China’s leading dairy company, has been reportedly exploring the possibility of selling a portion of its stake in Aice Group Holding.

According to Bloomberg, Mengniu is mulling the sale of up to 20% of its holding in Aice, following a recent capital injection aimed at accelerating the brand’s regional expansion.

The move comes amid shifting strategic priorities and growing investor interest in Southeast Asia’s consumer goods sector.

Aice, which launched its overseas operations in 2015, has rapidly emerged as a market leader in Indonesia and ranks second in the Philippines.

Its success is attributed to a nimble market strategy, including the establishment of local factories to reduce logistics costs and tailor products to regional tastes.

With annual revenues exceeding RMB 3 billion, Aice has become a benchmark for Chinese food and beverage brands seeking global reach.

Mengniu’s potential divestment is seen as a strategic recalibration rather than a retreat. Industry analysts suggest the sale could attract global investors eager to tap into Aice’s growth trajectory, especially as the brand continues to expand into Vietnam, Thailand, and other emerging markets.

While Mengniu has not officially commented on the reports, the speculation underscores the dynamic nature of China’s outbound investment strategy and the evolving landscape of Southeast Asia’s consumer market.

The news comes after the company issued a profit warning for 2024, citing declining sales and impairments within its business units. 

According to a stock exchange filing, the Hong Kong-listed dairy company expects to record a profit between 50 million yuan and 250 million yuan for the year, a steep decline from 4.8 billion yuan in 2023. 

The drop is attributed to impairment provisions at its subsidiary Bellamy’s Australia and asset devaluation at China Modern Dairy.

Mengniu stated that an imbalance in the supply and demand for raw milk, coupled with lower-than-expected consumer demand, has also weighed on earnings. 

The company, which acquired Bellamy’s in 2019, said it had assessed the subsidiary’s financial position and market outlook, leading to an expected impairment provision on goodwill and intangible assets. 

This, along with deferred tax effects, is projected to impact the group’s financial performance by approximately 3.8 billion to 4 billion yuan. Bellamy’s is expected to report a loss for 2024.

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