Coca-Cola Co., the world’s largest beverage company, will buy a line of Chinese protein drinks for about $400 million, making a renewed push into the Asian market after another takeover deal was blocked six years ago.
Coca-Cola will pay cash for the the business, called Xiamen Culiangwang Beverage Technology Co., according to a statement from the Atlanta-based company. The drinks, sold under the China Green brand, are made with plant-based proteins, such as green and red beans or walnuts.
The move marks a return to Chinese deals for Coca-Cola after a failed attempt to buy the country’s biggest domestic juice maker in 2009. Chinese regulators killed the $2.3 billion purchase, saying it would have hurt competition. The decision raised concerns at the time that China was using anti-monopoly rules to block foreign investment.
Xiamen Culiangwang would help Coca-Cola capitalize on the surging popularity of plant-based protein drinks in China, where many consumers shun milk. It also gives it another opportunity to reinvigorate overseas sales after a slowdown. While the company’s earnings topped analysts’ estimates last quarter, it was mostly because of U.S. strength -- not international sales.
“China is an important growth market for us and this investment complements our beverage offerings there,” said Petro Kacur, a spokesman for Coca-Cola.
Coca-Cola is acquiring the business from China Culiangwang Beverages Holdings Ltd., which also makes pastries, bean soup and desserts. The deal was initially announced by Culiangwang in a statement sent to the Hong Kong Stock Exchange. Shares of the company, which were halted Thursday, will resume trading on Monday.
Coca-Cola shares were little changed on Friday in New York, trading at $40.51 as of 11:12 a.m. The stock was down 3.8 percent this year through Thursday’s close.
Coca-Cola’s history in China dates to 1978, when it signed an agreement with the government to sell beverages in the country. For years, the company just catered to tourists in China, but expanded operations in the 1980s allowed it to serve local consumers as well.
Of late, the Chinese market hasn’t been a big source of growth. Unit volume declined 3 percent last quarter in China, Coca-Cola said in February. While Coca-Cola brand beverage grew 3 percent in the period, there was softness in the juice category, the company said at the time. Xiamen Culiangwang would give them a new way to appeal to local consumers.
Plant-based protein drinks have grown at about 18 percent a year in China since 2008, according to a report from Mintel Group Ltd. last year. Many Chinese are lactose intolerant and see the protein drinks as a healthier alternative to regular milk, the research firm said. Milk safety also became a major concern in 2008, when locally made melamine-contaminated milk powder may have killed at least six infants in China.