China yogurt brand secures $122m Series B
Simple Love, also known as Jian’Ai, a Chinese yogurt brand, has raised RMB800 million ($122 million) in Series B funding from Matrix Partners China, BA Capital, CITIC Agriculture Fund, and Maison Capital. They all backed the company's RMB400 million Series A last May.
Other investors include Sequoia Capital China, Yunfeng Capital, Proterra Investment Partners, and DCP Investments. The new capital will be used for the construction of a modern dairy farm.
Simple Love was founded in 2015 by Haitong Xia who previously led the low-temperature products division at China Mengniu Dairy. It focuses on high-quality natural yogurt with no additives and plans to launch a fresh milk product line this year.
The overall low-temperature yogurt market saw a 12.5% year-on-year decline in sales in 2020 due to the impact of COVID-19 according to Nielsen. However, Simple Love’s sales rose 70%. The company has seen compound annual growth of 109% over the past five years, with cumulative sales of RMB2 billion.
It claims to be the best-selling low-temperature yogurt brand in boutique supermarkets Ole and Hema and in bulk retailer Metro, as well as on Alibaba Group's Tmall online channel.
Simple Love sources milk from top-quality domestic dairy producers including AustAsia, China Modern Dairy, and Fonterra. It has also invested RMB100 million to date in equipment and production lines in collaboration with three partner factories.
In addition to establishing its own farm, the Series A funding will be used to build a factory in Heibei province. It will be located at a latitude of 41 degrees north, dubbed as the global golden milk source belt. Production will start in April. Simple Love claims it will be the only factory globally focused on low-temperature milk products with no additives.
“The low temperature and the short shelf cycle mean the company has very high requirements in terms of supply chains, sales, and brand synergy. This is difficult to do," BA Capital said in a statement. "But the higher the barrier, the greater the value of the company.”
The consumer-focused venture capital, which closed its second renminbi-denominated fund at RMB1 billion last year, backs brands that resonate with China's youth demographic. Numerous VCs are now making investments with similar theses. In the past year, the likes of coffee specialist Saturnbird, oatmeal producer Wangbaobao, and instant noodle brand Baijia have all received funding.
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