- Australia’s Freedom Foods inked a joint venture deal to sell its cereals and snacks in China.
- The agreement is with Theland New Cloud Digimart Co, majority-owned by Jack Ma’s Alibaba.
- Freedom says changing tastes means Chinese consumers are increasingly looking to healthy Western breakfast and snacks.
Freedom Foods has closed a deal with Theland New Cloud Digimart Co, majority-owned by Jack Ma’s Alibaba Group, to distribute cereals and snacks in China.
The agreement with Theland, a brand distributor with sales capabilities in more than 25 Chinese provinces, seeks to develop the Arnold’s Farm range to cater for increasing Western tastes.
Theland will become the exclusive distributor for Arnolds Farm cereal and snacks in China, including online and offline channels, leveraging the integration between online and the new retail strategy being developed by Alibaba.
At the close, Freedom Foods shares were up 5.6% to $5.45.
The Arnold’s Farm brand is one of the top three oat cereals on Alibaba’s Tmall International and is also sold in more than 4000 outlets across China.
Sales of Australian products are booming in China, especially vitamins and infant formula which have a safe and clean image.
Last year Freedom Foods, one of a handful of Australian companies selling infant formula in China, started production of “Australia’s Own” branded “Kids Milk” to sell in China.
In the latest deal, Theland and Freedom Foods will setup a China-based joint venture to develop and market the Arnold’s Farm brand.
The joint venture will own the Chinese language trademark for Arnold’s Farm and be responsible for all sales marketing and distribution of the range in China.
Freedom Foods will remain the exclusive long-term manufacturer of the Arnold’s Farm range.
The arrangements with Theland will be similar to the strategic equity partnership established between Freedom Foods and JLL for Australia’s Own Kids Milk.
Rory Macleod, Freedom Foods Group CEO, says the company has been selling into China for more than five years.
“We have a good footprint here in China and it is strategic long term partnerships like this with Theland that will help us continue our strong trajectory for driving our brands and products into China, supported by our unique supply sources and scaled manufacturing capabilities in Australia,” he says.
“There remains significant growth opportunity into the Cereal & Snacks categories in China.
“What we’re seeing is changing preferences and tastes from Chinese consumers who are increasingly looking to healthy Western breakfast and snacks formats as provided through Freedom Foods’s Arnold’s Farm range.”
Freedom Foods has also started supply of an A2 protein milk product in UHT format to Theland.
Theland is majority owned by the Alibaba Group including Shanghai Yunfeng Xinchuang Investment Management Ltd, backed by Alibaba’s founder and Chairman Jack Ma, and Alibaba China Network Technology Co. The rest of the company is owned by management and the Pengxin Group.