Japan's Meiji plans two new factories in China to sell locally made dairy goods

Meiji Holding Co Ltd, the Japanese confectioner and dairy products maker, will put two plants into operation in Tianjin and Guangzhou by 2023 to sell locally produced dairy products such as pasteurized milk and yogurt, said a business executive.

Many opportunities come from Chinese consumer's rising incomes and China's fast urbanization pace, as well as younger generation's surging demand for various dairy products, said Jun Okajima, director general manager of Meiji Dairies (Suzhou) Co Ltd.

The company started to sell two types of functional yogurts namely LG21 and R-1 in China's eastern market on Thursday. They will be manufactured in the company's plant in Suzhou, eastern China's Jiangsu province.

Apart from building another two factories in Tianjin and Guangzhou, Okajima said the company is currently adding more production lines in its Suzhou factory and they will become operational in June. Due to the limited production capacity, Meiji's two newly introduced yogurt products are currently available in Shanghai municipality, Jiangsu, Zhejiang and Anhui provinces.

These two types of functional yogurts are designed to enhance consumer immunity and reduce the harm of helicobacter pylori, he said, adding they have been successfully tested in Japan for more than a decade.

With more Chinese consumers preferring to purchase goods online, the Japanese executive said the company will also sell its new products on Alibaba Group's Tmall online shopping platform and JD, another e-commerce giant, to maintain competitive edge in both online and offline channels in the country.

In addition to purchasing the milk source from its suppliers such as Greenfields, Meiji plans to work with more Chinese dairy companies to gain sufficient supplies from the long-term run in China.

"Food consumption is a reflection of economic success. Food consumption is rising. The types of foods people eat are diversifying," said Okajima. "Foods are becoming more sophisticated and they need to be more healthy and convenient, therefore the whole dairy industry and consumer market have dramatically transformed in China."

In China, a large number of consumers regard yogurt as a product that is nutritional, and can help with digestion and diet. Yogurt consumption has risen due to demand from lactose intolerant Chinese people, said Zhang Yongjun, a researcher at the Beijing-based China Center for International Economic Exchanges.

"With the COVID-19 pandemic forcing more people across the world to pay attention on their health and living environment, China's growing middle-income families are willing to spend more on high-end, nutritional dairy items," he added.