Kellogg Company, Battle Creek, MI, and Singapore-based Wilmar International Limited have entered a 50/50 joint venture for the manufacture, sale and distribution of cereal, wholesome snacks and savory snacks in China. Wilmar’s wholly-owned subsidiary in China, Yihai Kerry Investments Co., Ltd, will participate in the joint venture.
Wilmar will contribute infrastructure, supply chain scale, an extensive sales and distribution network in China, as well as local market expertise to the joint venture. Kellogg will contribute a portfolio of globally recognized brands and products, along with deep cereal and snacks category expertise. The joint venture will use the Kellogg’s and Pringles brands. Together, Kellogg and Wilmar will leverage this complementary expertise to maximize marketing and manufacturing synergies.
China is expected to become the largest food and beverage market globally within the next five years, driven both by the growth of a middle class consumer base in large cities, and also an increased desire for a wide range of packaged and branded foods. Cereal consumption is currently being driven by rapid growth in milk consumption, along with consumers’ desire for healthy and convenient breakfast foods. Snack foods also represent a very large growth opportunity.
“China’s snack-food market alone is expected to reach an estimated $12 billion by year-end, up 44% from 2008,” said John Bryant, president and CEO of Kellogg Company. “This joint venture positions our China business for growth and fundamentally changes our game in China. Our organizations have developed a strong working relationship and trust.”
Kuok Khoon Hong, chairman and CEO with Wilmar, added, “This joint venture with Kellogg will complement our existing Consumer Product business and leverage our extensive distribution network and support infrastructure in China. With our joint strength and shared vision, I am confident that we will be able to develop a leading cereal and snacks business together.”
The joint venture company will be headquartered in Shanghai, China. Launch of the joint venture is subject to customary conditions, including regulatory approvals by the Chinese government and anti-trust approvals.