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Focusing on smaller cities part of strategy

BRIGHT Dairy and Food Co said it would continue to buy smaller dairy firms in second-and-third-tier cities as part of its expansion strategy to catch up with Inner Mongolia-based Yili and Mengniu amid a slowing economy.

Guo Benheng, president of Bright Dairy, said the nation's third-largest milk producer is talking with some regional dairy firms about a possible takeover. But he declined to say more.

"The focus of the acquisition will be on dominant brands which operate in regional areas," Guo said.

By eying smaller brands, Bright Dairy hopes for access to new markets in smaller cities and boost its sales.

"It's a good time for low-budget expansion right now as the whole industry is suffering difficulties," said Liu Jinhu, an analyst at Guohai Securities Co.

Bright Dairy, Mengniu and Yili posted huge losses last year after the banned chemical, melamine, was found in their milk products. Shanghai-listed Bright Dairy lost 286 million yuan (US$41.8 million) last year and suffered a 10.3-percent drop in sales due to the scandal.

The fresh milk producer has quickened its pace in developing ultra high-temperature sterilized milk products to win back market share from China Mengniu Dairy Co and Yili Industrial Group Co.

Last week, Bright Dairy began domestic sales of the new Momchilovtsi yogurt in cooperation with Petra Pac.

The dairy firm aims to grow revenue of its dairy milk business to 8.2 billion yuan this year and earn a profit of 162 million yuan.


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