Meituan Dianping is jumping into China’s upstream food supply industry amid signals from central authorities that ensuring adequate availability following the African swine fever epizootic will be a major focus in 2020.
Longzhu Capital, the investment subsidiary of online-to-offline services giant Meituan, was the sole financier in the first funding round of Guangdong Meat Union Fresh Holdings Co. Ltd., Meituan said in a statement.
New Partnership Signal New Opportunities
Meat Union is a food retail chain with about 500 locations in southern and eastern China whose founder runs an animal husbandry conglomerate. The company, Guangdong Yihao Foodstuff Co. Ltd., owns a 70% stake in Meat Union. Meituan did mention that it will collaborate on supply chains, products, store operations, online-to-offline services, tech investments and more.
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In recent weeks, China’s senior leaders, including Politburo members and party chiefs of first-tier municipalities, have attended inspection tours of grocery markets and urged other officials to help ensure sufficient supply and stable prices for pork and other foods in 2020, especially in the lead-up to the Lunar New Year celebrations.
The outbreak of African swine fever has slashed hog herds, causing pork prices to more than double in November from a year earlier and driving up the cost of other staples. China’s mom-and-pop pig farmers have also struggled to recover losses, leading to signs of consolidation in the industry.
“To be seen to be investing in the agricultural and rural sectors (especially pig production at the moment) will help build relationships with state and party at the highest level,”Even Rogers Pay, lead agriculture analyst at research firm China Policy.