China Foods has announced it will sell all its wine and non-beverage business to its parent company Cofco for HKD 5,069 million ($649.3 million).
The deal will see China’s second largest winemaker offload its Great Wall brand, which has five production plants in the country.
China Foods’ wine business recorded a negative compound annual growth rate of -11% from 2011 to 2016, with Great Wall posting declining sales.
Upon completion of the deal, China Foods will become the only focused beverage platform of Cofco. Currently, the company has exclusive rights to produce, market and distribute Coca-Cola products in 19 provinces, municipalities and regions in China.
China Foods aims to strengthen its cooperation with Coco-Cola Company, continue optimising its product offerings, ensuring the continuous growth of packaged water, soft drinks and juice products and launching new higher margin products.
Cofco chairman Zhao Shuanglian said that the transaction is another important move by the company to implement its specialisation platform strategy and execute vertical integration through the establishment of specialised companies target in core products.
State-owned Cofco is China’s largest food processing company. It owns 11 companies and earns more than 50% of its operating income from overseas business.
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