China-Biotics expands probiotics deal with Bright Dairy

By Shane Starling

- Last updated on GMT

Related tags: Probiotic

China-Biotics expands probiotics deal with Bright Dairy
Leading Chinese probiotics supplier, China-Biotics, has pressed a deal with the country’s third biggest dairy to expand the number of probiotic strains it uses in yoghurt products.

Bright Dairy, part of the Bright Food group that was at one point the highest bidder in the recent Yoplait auction eventually won by General Mills, will use an additional three strains in its probiotic yoghurt products.

"We are very pleased to have expanded our products supplied to Bright Dairy, a top three dairy producer in China. Our undivided efforts on R&D and developing customized solutions for different dairy companies are starting to pay off,”​ said China-Biotics CEO and chairman, Jinan Song.

"Our current stock price does not reflect our long-term value and premium product quality in a large addressable market capable of sustaining rapid growth. Management will continue to focus on optimizing business operations and market expansion. We remain confident that, in the long run, our strategic position and ability to create value will be recognized by the US investment community."

China-Biotics first entered bulk probiotics supply in 2007 and last year started producing bulk probiotics at its new Qingpu facility in Shanghai.

China-Biotics speculation

Analysts earmarked the company as a potential takeover target for Danisco after the Danish global probiotics leader was acquired by DuPont in January this year.

Sean Wright, an analyst with investment website Seeking Alpha, said China’s biggest bulk probiotics supplier, a company that Danisco has worked with in the past, was a likely target if Danisco was to tap any investment fund it now had at its disposal.

“Normally when a competitor gets bought at a much higher valuation, a whole industry tends to move up in valuation,”​ Wright wrote, noting that the Chinese company’s relative anonymity on western markets meant its stock had not risen on the back of the Danisco buy-out, thereby adding to its attractiveness.

“We know that Danisco has a strong position in the bulk probiotics market in China, but no local production and that it imports all of its product. We know that CHBT has the largest stand-alone probiotics facility in the world and is the only Chinese player with the ability to produce bulk probiotics at the same quality standard as Danisco and Chr Hansen. We also know that CHBT’s bulk business is growing very quickly, now with over 50 customers, and taking market share from Danisco and Chr Hansen.”

Patents pending

The company’s subsidiary, Growing Bioengineering, this year lodged a series of patents to China’s State Bureau of Intellectual Property relating to:

  • A new probiotics supplement and preparation for babies’ immune and digestive health, specifically intended to reduce incidence of diarrhoea.
  • A micro-encapsulation technique for using probiotics in beauty products.
  • A preparation of probiotics for adding to soy milk.
  • Probiotics for use in feminine hygiene products.
  • A manufacturing method for heat-resistant microencapsulated probiotics.

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