The Rising Influence of Rising Affluence

[DewDiligence]

ABT, Fonterra ink dairy collaboration for Chinese market:

http://finance.yahoo.com/news/abbott-fonterra-form-strategic-alliance-180100103.html

Abbott and Fonterra Co-operative Group Ltd today announced the signing of an agreement to develop a proposed dairy farm hub in China . The strategic alliance, which is subject to Chinese regulatory approval, will leverage Fonterra's expertise in dairy nutrition and farming in China and Abbott's continued commitment to business development in China .

Dairy consumption in China has been rising steadily over the past 10 years. The continued development of safe, high-quality milk sources is essential to meeting this growing demand from Chinese consumers.

…If approved, Abbott and Fonterra will form a joint venture to invest a combined US$300 million into the farm hub, which will contain up to five dairy farms and more than 16,000 dairy milking cattle in production, producing up to 160 million liters of milk annually. The herd for this hub will comprise animals either imported, or sourced from Fonterra's existing farm hubs.

Milk-based infant formula is one of ABT’s main businesses (#msg-100847322), and China is the biggest growth engine for infant formula (#msg-90394034), particularly as the country’s “one child” policy is relaxed (#msg-94089270, #msg-94149186).

Fonterra is a dairy cooperative based on New Zealand. First production from the ABT-Fonterra JV is expected in 1H17.

See #msg-104130001 for additional (bullish) commentary on investing in ABT.