Bright Food: Israeli cheese beats European cheese

If the deal is signed, Bright Food VP Ke Li plans to import Tnuva cheeses to China.

"Tnuva is a great food company. Many of its products are suitable for the Chinese market, and if the deal is finalized, we will be able to import Tnuva cheeses to China, said Bright Dairy & Food Co. deputy general manager and marketing director Ke Li at a tour that the company held for the Israeli press in Shanghai. Li complimented Tnuvas products, and said, The flavor of cheese in Israel is different from Europe, and it is better, in my opinion.

She added, We already have a partnership with Israel. Our representatives travel to Israel 3-4 times each year, and we already have partnerships with dairy-technology companies, like SCR (a company specializing in developing and manufacturing milking management systems - I.A.)

Currently, Chinese Bright Food Group is in talks to buy Tnuva Food Industries Ltd. from Apax Partners, at a company value of NIS 9 billion. The talks between the parties are very advanced, and sources believe the deal will be signed soon. If the company is sold at a value of NIS 9 billion, it would mean tremendous profit for Apax, which bought the company at a value of less than NIS 4 billion.

Bright Food is a Chinese food group, which operates in a range of areas, foremost among them dairy products. The company also deals in sugar, cookies, wine, agricultural products, and even has a logistics operation, which includes a taxi company. Bright Food was founded in 1911, and is government owned. The companys sales totaled $25 billion last year, and its net profit was $500 million.

Bright Food is aware of the concern in Israel regarding the transfer of the Israeli food giant to Chinese control, and is attempting to lift the cloud and ease the doubts, by, among other things, presenting the company to Israelis, including reporters and Bank Bank Leumi (TASE: LUMI) executives, who are in talks to assume the loan extended to Apax to acquire Tnuva.

Supporting growth

Bright Food already has a number of subsidiaries, including Bright Dairy & Food Co., which is the second-largest dairy company in China. Bright Dairy & Food, the company that will acquire Tnuva if the deal is signed, is traded on the Shanghai Stock Exchange. Bright Dairy & Food has 23 factories. The site we visited in Shanghai, which is one of the companys largest factories covers 156,000 square meters, and produces 2,400 tons of milk and yogurt each day. There are almost no workers in the corridors. In fact, there are only 1,200 workers at the plant, and most of them are in the control and logistics areas, not production.

Bright Dairy & Food today primarily produces milk and yogurt. The companys market share is 45.5% for milk, and 26% for yogurt. The company has a full range of products by percent fat - the more fat, the more expensive the product. The milk market is considered a growth market in China. According to Li, the market has grown an average of 20% annually over the past 15 years.

The dairy companies are having trouble keeping pace with the rising demand, and, therefore, they place emphasis on developing technology that is meant to maximize the efficiency and output from existing production means. While Bright Food has good market shares in milk and yogurt, for other products, such as soft and hard cheeses, its market share is smaller. The company wants to increase its cheese market share, and to begin importing Tnuva cheeses to China.

In recent years, Bright Food has become active internationally, and has acquired a number of companies. For example, in 2010, the company bought a milk production company in New Zealand, which produces 50,000 tons of milk annually. The group has also acquired a British cereal company, as well as wine producers in Australia and in France, in recent years. The groups strategy is to concentrate on dairy overseas, said Li. We are considering various acquisitions, based on the synergy that they will provide our operations in China, and we are essentially harnessing global resources to support growth in China.

The author was a guest of Bank Leumi in Shanghai

Published by Globes [online], Israel business news - - on May 14, 2014

Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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