Retailing, Franchising, and Consumerism Business Intelligence in China

Hangzhou Wahaha Offers To Buy Sanlu Group

At the 21st anniversary meeting of Hangzhou Wahaha Group, the group's president Zong Qinghou said that they had expressed their intention to acquire the Shijiazhuang-based dairy enterprise Sanlu Group.

So far, Wahaha has not received any reaction or feedback from the Sanlu Group.

Affected by the melamine scandal, the Sanlu Group is facing a crushing financial blow. Early rumors said that Beijing Sanyuan Group, Heilongjiang Wondersun, and another company participated in the bid for Sanlu. So far, Wahaha, which is reported to be the "another company", has publicly confirmed its intention to acquire Sanlu while Sanyuan and Wondersun have not commented on the rumor.

Zong told local media that with an annual consumption of 150,000 tons of milk powder raw materials, Wahaha had been using imported milk powder in its dairy beverages in the past. However, because the price of imported milk powder has surged from USD2,000 per ton to USD5,700 per ton over the last two years, the company started to use milk powder produced in Xinjiang Province from 2008.

Commenting on the acquisition of Sanlu, Zong said the most valuable resources were its equipment and skillful employees. No matter whether the acquisition of Sanlu would be successful or not, Wahaha may enter China's milk powder industry in the future and the possibility of entering the infant formula sector cannot be excluded, Zong added.

According to Wahaha, the company will establish five milk powder bases around China, covering Xinjiang, Dali, Ningxia, Heilongjiang, and Jilin. At present, its milk powder bases in Changji, Xinjiang and Wuzhong, Ningxia are already operation, providing milk powder for Wahaha's dairy beverage production.

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