China Mengniu Dairy, one of China’s leading dairy producers, has written down the value of its infant formula business linked to Australia’s Bellamy’s Organic by USD 1 billion. Based in Inner Mongolia, China, the company has issued reassurances to lenders HSBC and ANZ as Bellamy’s financial losses and global market pressures continue to mount. This development raises concerns over foreign investment viability in Australia’s dairy sector amid economic headwinds.
China-based Mengniu Dairy, headquartered in Inner Mongolia and one of the largest dairy companies in Asia, has written down the value of its local infant formula business—specifically related to Bellamy’s Organic in Australia—by a staggering USD 1 billion. This marks a significant financial setback for the company and its international expansion efforts.
The writedown follows continued losses from Bellamy’s Organic, which Mengniu acquired in 2019 for USD 1.5 billion. Last year, Bellamy’s reported a USD 922 million loss after a USD 1.03 billion impairment. These losses forced Mengniu to issue a formal letter of support to key lenders HSBC and ANZ, who have jointly provided a USD 60 million loan to the Australian infant formula company.
Mengniu’s financial disclosures in Hong Kong also revealed that the company’s overall profit expectations have sharply declined—from nearly USD 660 million the previous year to between USD 11 million and USD 34 million currently. The company attributed this drop to poor sales performance and asset impairments.
Despite major investments in Australia—including its stake in Burra Foods in Victoria—Mengniu continues to face setbacks. The company recently hired McGrathNicol to sell Brownes Dairy in Western Australia after withdrawing a USD 200 million loan.
Foreign investment challenges and regulatory scrutiny in Australia have further strained Mengniu’s expansion goals. Analysts like Michael Harvey from Rabobank noted that weakened consumer confidence in both the United States and China, coupled with broader economic downturns, are pressuring global dairy markets.
With the possibility of price recalibrations looming in the international dairy sector, Mengniu’s situation signals broader risks for foreign players investing in Australia’s agricultural industries.
