China's biggest dairy group Yili will build a CNY208 million (€20.7m) milk powder factory in northwest China, it revealed last week.
The plant, to be built in the Xinjiang Uygur Autonomous Region, will make 250,000 tons of mid- and high-grade milk powder a year, Yili said in a statement to the Shanghai Stock Exchange.
The Inner Mongolia-based company is increasing capacity to meet rising demand for dairy products in China. China's annual dairy consumption has tripled to 28 million tons since 1999 and is forecast to reach.
Yili and another national brand Mengniu continue to increase their market share, buying up smaller dairies or squeezing them out of the marketplace. The two now dominate more than 40 per cent of the milk market, and analysts expect their shares to keep growing as they add new, higher value products like functional milks and yoghurts.
"Yili's increasing investment in the yoghurt market, which is less developed than that of milk, looks promising for the company. It currently has a 14 per cent share of this segment," said Citic Securities analyst Bo Guanhui.
Yili recently reported a 30 per cent rise in first half revenue to CNY5.7 billion (€558.5m) and net profits up by 11.5 per cent over the prior year's first half to CNY171 million.
The new milk powder plant is expected to be finished by the end of next year.