New Hope Dairy to Sell 45% Stake in Yogurt Brand Yi Zhi Suan Nai Niu at Lower Valuation

This is an English adaptation of a FoodBud historical article originally published on November 28, 2023.

On November 28, 2023, New Hope Dairy announced plans to transfer a 45% stake in Yi Zhi Suan Nai Niu, a Chinese yogurt-drink chain, to Grass Green Group for RMB 148.5 million. The consideration implied a total valuation of RMB 330 million for the brand.

New Hope Dairy had acquired a 60% stake in Yi Zhi Suan Nai Niu in 2021 for RMB 231 million, implying a valuation of RMB 385 million at the time. Based on the 2023 transaction price, the brand’s overall valuation had declined by 14.3%.

Store Scale and Performance

According to New Hope Dairy’s announcement, Yi Zhi Suan Nai Niu operated more than 1,000 stores.

For the first three quarters of 2023, the brand recorded:

• Revenue of RMB 230 million
• Net loss of RMB 4.16 million

In 2022, it recorded:

• Revenue of RMB 220 million
• Net loss of RMB 9.92 million

Data from Narrow Door Restaurant Eye showed 960 existing stores.

Buyer Background

Grass Green Group’s founding partner is Xi Gang, chairman of New Hope Dairy. The group is also part of the broader New Hope system.

According to Grass Green Group’s website, the company was formally established on July 6, 2015, as an innovation and entrepreneurship platform initiated by New Hope Group chairman Liu Yonghao, Wang Hang, Xi Gang, and other partners. It was positioned to support New Hope Group’s shift from business-facing markets toward consumer markets. The company had received an initial RMB 1 billion investment and more than RMB 10 billion in investment over the previous two years.

Liu Yonghao is chairman of New Hope. Wang Hang is vice chairman of New Hope and a founding partner of Hosen Capital.

Strategic Fit

Grass Green Group’s industry layout largely extends from New Hope Dairy’s business base. Its largest segment is cold chain, followed by compound seasonings, with additional activity in health products and pet food.

Its cold-chain business remained the largest contributor. Fresh Life was described as its flagship project, supported by foundational related-party business from New Hope Liuhe, New Hope Dairy, Juewei Food, and others. The cold-chain business had continued to expand by acquiring smaller regional companies and integrating operations. The key operational test was integration capability: using middle-office technology support to improve efficiency at acquired businesses and expand customer resources.

Fresh Life had nationwide urban service capabilities in China, anchored by several major customers and backed by strong capital support. The article noted that cold-chain logistics is a capital-intensive business.

Grass Green Group’s compound-seasoning platform was built around Chuanwazi, Fuhou Foods, and Guoniang Foods. From that segment, the group had also begun incubating offline foodservice store businesses, including the establishment of Shidai Canchuang, led and controlled by Chuanwazi. The article noted that these incubated businesses had not yet performed especially well.

Why the Deal Matters

For New Hope Dairy, selling Yi Zhi Suan Nai Niu to Grass Green Group meant the brand would no longer be consolidated in its financial statements. Based on the available numbers, Yi Zhi Suan Nai Niu was still expected to be loss-making for full-year 2023, though the loss appeared likely to narrow versus 2022.

New Hope Dairy would retain a 15% stake in the brand. It could also continue supplying products to Yi Zhi Suan Nai Niu; New Hope Dairy estimated RMB 60 million in related-party transactions with the brand in 2024. Operational integration would be handed to Grass Green Group.

From Grass Green Group’s perspective, its strength was in supply chain capabilities, including cold chain and compound seasonings. Whether those back-end supply and manufacturing capabilities could help Yi Zhi Suan Nai Niu perform better remained to be seen.

Note: Valuation, transaction, loss, and 2024 related-party transaction figures are historical figures from the 2023 article.