Business Intelligence on Retailing, Franchising, and Consumerism in China

Asahi Breweries Enters China's Milk Sector

Asahi Breweries and Itochu Corporation have announced the establishment of a milk company in Shandong Province, China.

The new company will produce milk under Asahi's proprietary label and the products will be sold to major cities such as Beijing, Shanghai and Qingdao. It marks the formal entry of Asahi Breweries into China's high-end milk market and the competition in this sector will be more severe in the coming three to five years in China.

The company, 90% of whose stake is owned by Asahi and 10% by Itochu, was established in Laiyang, Shandong Province in April. According to Asahi Breweries officials, specialized in high-end natural and original-flavor milk, the factory will introduce the advanced ESL technology, which can extend the storage period for milk. The output of the factory is expected to reach 350 tons in the first year and the number will be 1,100 tons in five years.

Supported by Itochu's sales network in China, Asahi milk products will be mainly sold in Japan-owned supermarkets and big department stores. The prices of the Asahi milk products will be about 50% to 100% higher than the average local milk and the products will be launched onto the market prior to August 8, the opening day of the Beijing Olympics.

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