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Foreign Funds Pour into Fruit Juice Firm
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China's leading fruit juice-maker Huiyuan has received over US$200 million in overseas investments, the Beijing-based company said yesterday.

Groupe Danone, Warburg Pincus, the Netherlands Development Finance Company (FMO) and Value Partners bought a combined 35 percent stake in China Huiyuan Juice Holdings Co Ltd, a Cayman Islands-registered subsidiary of Beijing Huiyuan Beverage & Food Group Co Ltd (Huiyuan Group).

The French food and beverage giant Danone owns a 22.18 percent share in China Huiyuan.

"Funds raised through the strategic investment will be used in building the company brand and sales channels, improving research and development, and expanding production capacity," said Zhu Xinli, chairman and president of Huiyuan Group.

But detailed plans have not yet been made, he said.

"Co-operating with these strategic investors will help strengthen our competitiveness and dominant position in the country's fruit juice market," said Zhu.

For overseas investors, Huiyuan and China's fruit juice market presents a good development opportunity.

Sources from the China Beverage Industry Association say the fruit juice market in China has been developing rapidly in recent years.

However, the per capita juice consumption is only less than 2 litres a year, much lower than the per capita consumption of over 40 litres in developed countries.

"Market demands for pure fruit juice and juice beverages are growing quickly," said Zhao Yali, secretary-general of the beverage association.

According to Zhao, consumption of fruit juice drinks account for around 20 percent of the country's total beverage market, and the proportion is expected to continue rising.

"We expect to bring Huiyuan into the world market in the near future, when further consolidating the brand performance in the Chinese market," said Qin Peng, president of Danone's China operation.

In addition to capital investment, Danone will use its own experience and expertise to help Huiyuan integrate sales channels and supply chains as well as upgrade production technology.

Danone has been active in buying into Chinese food and beverage companies like Wahaha, Robust and Bright Dairy, to expand its business presence here.

Industry analysts said that Huiyuan is preparing for a public listing, and this is part of the reason why it introduced strategic investment.

Zhu admitted that the company plans to get listed, but there is no direct link between listing and investment from the four companies, and no timetable has been set for the listing.

China Huiyuan was established under a co-operation deal signed between Huiyuan Group and Taiwan-based Uni-President in March, 2005.

Under the deal, Uni-President will invest US$30.3 million for a 5 percent stake of China Huiyuan, while Huiyuan will split its fruit juice business from Huiyuan Group into the new venture.

Fruit plantations, raw material processing, and production and export of juice concentrates remain in the group company.

However, Uni-President quit the investment due to the adjustment of the two sides' investment strategies, the Taiwan company said in a statement yesterday.

Established in 1992, Huiyuan Group now has over 20 production sites and a number of fruit planting bases around the country.

Its sales reached 4.5 billion yuan (US$563 million) last year and it had about half of the domestic fruit juice market.

(China Daily July 4, 2006)

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