Montec seeks funds for China strategy

Advertisement Montec International is heading back to the market to seek $4 million to underpin its growth strategy in China, where it is in partnership with dairy producer Beijing Dairy Sanyuan Foods Ltd. The dairy food technology company's dairy pure long life brand is now sold in 2,800 outlets in Beijing and Shanghai and it aims to increase that to 6,000 stores by June 30 and 10,000 by the end of 2007.

Managing director Peter Herd said the Montec-licensed technology, that enables the production of monounsaturated cholesterol-free dairy products, has struck a note with the more affluent Chinese striving for a Western lifestyle. Mr Herd, who spent 25 years with Coca-Cola amatil and five years with Dairy Farmers, said the $US11 billion ($A14 billion) Chinese dairy market has been growing at 10 to 12 per cent per annum for the past five years. "We don't see the drivers behind it disappearing in the short term," Mr Herd told AAP. "It's very much an outlet game and what we are focused on for the next 12 months is simply getting market penetration and presence in the market by store numbers." He said in-store promotions would follow, to build the dairy products innovator's volume and share of the dairy cake.

The market is growing across all sectors – dairy, yoghurt, cheese and ice cream - and areas that Montec will move in to once it has traction in the market for its long life, or UHT, dairy product. Distribution is also improving in China with previously provincial-based businesses now able to take their product nationally. "What we are finding is the trend towards national companies, with provincialism breaking down, and its partially driven by people like (French retailer) Carrefour coming into the market at the top end," Mr Herd said.

The trend is being supported by Korean, Japanese and Taiwanese firms and so on also entering the market and driving modernization in the retail sector. Last week, Montec made presentations to its shareholders, potential investors and brokers, as it sought support for a share placement and a rights issue over the next few weeks to raise about $4 million.

"We'll use that money to fund continuing rollout of the UHT dairy in Beijing and Shanghai and launch the ice cream product and yoghurt in September all under the dairy pure banner," Mr Herd said.

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