Meiji Divests Chinese Dairy Units Amid Rising Losses
Meiji Holdings, a prominent Japanese food conglomerate, has officially announced the sale of its drinking milk and yogurt production operations in China to Shanghai AustAsia Food. The deal, valued at up to 320 million yuan (approximately $47.2 million), involves the transfer of Meiji's production facilities located in Tianjin and Suzhou. This strategic move is part of Meiji's efforts to address significant financial challenges in the Chinese market.
The decision to sell these assets comes in the wake of substantial losses incurred by Meiji’s Chinese subsidiaries. For the fiscal year ending in December, Meiji (China) Investment reported a net loss of 1.04 billion yuan, more than doubling its previous year's loss of 490 million yuan. Despite a revenue increase at the Tianjin plant, it still recorded an operating loss of 50 million yuan, while the Suzhou facility shifted from a 22 million yuan profit to a 100 million yuan loss due to market pressures.
The buyer, Shanghai AustAsia Food, is a subsidiary of the AustAsia Group, a Singapore-listed major raw milk producer. Notably, Meiji holds a 15.85% equity stake in AustAsia Group. To ensure transparency in the transaction, Meiji appointed independent third-party experts to evaluate the assets.
The transaction's final purchase price will be subject to net asset adjustments at closing, and it is expected to be finalized by the end of 2026. Until then, a transitional trademark licensing agreement will be in place for select product lines.
Meiji's decision reflects broader challenges faced by foreign dairy brands in China's competitive market, where local price wars and increased farm capacity by domestic companies have put pressure on international players. Meiji plans to retain its Guangzhou manufacturing site and continue focusing on its core yogurt intellectual property, while redirecting resources towards its chocolate and confectionery divisions, which are higher-margin categories.
The strategic move aims to preserve Meiji’s supply chain exposure by transferring processing assets to its upstream partner AustAsia while reducing direct operational overheads. This divestment underscores the difficult environment for foreign dairy brands in China and Meiji’s adaptive strategy to maintain its presence in the market.
