Brownes Dairy has found its ‘prince’ in Chinese dairy giant Shanghai Ground Food Tech, according to managing director and chief executive Tony Girgis.
Shanghai Ground purchased the WA dairy company in November 2017 in an effort to increase liquid milk and cheese exports to China.
Brownes had been up for sale from December 2016 and they had to meet a lot of potential buyers before they accepted Shanghai Ground’s offer, Mr Girgis told attendees at the Committee for Economic Development of Australia’s the china connection event on Thursday.
The company is now planning a $10 million investment in the non-operational Brunswick cheese factory in WA’s south west to produce 6000 tonnes annually – most of which will head to China.
“I would’ve met no less than 15 potential partners that wanted us to work with them,” Mr Girgis said.
“When you meet the first and second and third one the numbers are intoxicating when they tell you what they can do with your product.
“Then the reality hits very quickly.
“We’ve had to kiss a lot of frogs to try and find one that had the semblance of a prince.
“I think we’ve found our prince.”
Mr Girgis said Shanghai Ground was already operating in the dairy industry, offered great export potential and was a good fit for Brownes, which has been making dairy products for Australian markets for more than 130 years.
He said the increasing appetite for quality Australian dairy products was growing by six per cent annually – compared to Australia’s one per cent annual growth.
“In 2016 alone the market was estimated to be at 17 billion litres of liquid milk… recent investments suggest that the Chinese market by 2022 will consume about 19 to 20 billion litres of liquid milk,” he said.
According to Dairy Australia figures Australia is the world’s fourth largest exporter of dairy products with 40 per cent of milk production heading overseas.
Dairy exports inject $2.7 billion a year into the economy.
Most of WA’s major dairy producers are foreign owned:
- Harvey Fresh was acquired by Italian dairy multinational Parmalat in 2014
- Masters is owned by Lion Dairy which is a subsidiary of Japanese beverage company Kirin
- Brownes was purchased by Chinese firm Shanghai Ground Food Tech in 2017
- Chinese food company Bright Foods operates farms in Mundijong and Margaret River and owns brands like the Margaret River Dairy Company and Babybel cheese
Panellists at the event also spoke about stagnating diplomacy between the Australian and Chinese Governments following China-based Australian businessman Geoff Raby’s calls for Foreign Minister Julie Bishop to resign to help ‘mend’ China Australia relations.
Sino Steel Australia managing director and China Chamber of Commerce in Australia president David Sun said for businesses the relationship was only getting better and better.
Article sourced from www.smh.com.au