Babies are the epitome of change. Symbolically, and in practice, they grow to become the people who run companies that grow. A small Tasmanian family company, Bellamy’s Organic, started selling organic baby formula in Australia in the early 2000s and by 2020 grew big enough to be sold to China Mengniu Dairy Company for a value of \($1.5\) billion. That is spectacular growth. Through a series of acquisitions, the founder leaving and returning in different roles, strategic supply chain decisions, and the unique demand and supply dynamics that arose out of the 2008 Chinese ‘melamine in baby formula’ scandal, when babies died from contaminated product made in China, the company was able to navigate through a value roller-coaster.2 By the end, Bellamy’s Organic with a mere 160 people owned barely any assets and, instead, leveraged its brand and marketing expertise plus its unique network of supply chain agreements with food manufacturing and distribution heavyweights like Bega and Fonterra. For China Mengniu Dairy Company, with its vast market of growing babies, the value of owning Bellamy’s Organic with its promise of supplying healthy, wholesome food for new life was compelling. For Australian regulators normally concerned with foreign ownership of valuable production assets, Bellamy’s distinct non-ownership of land, farms or animals proved no real barrier to the takeover agreement. Shareholders of Bellamy’s were also able to see reward to them from the takeover. Subsequently, the company in Australia expanded under the leadership of CEO, Tarsi Luo. She implemented some restructuring to change from country-focused strategies and teams toward a functions-driven approach, while also acknowledging the cultural differences within the company. Bellamy’s adopted a five-year strategy to expand its platforms, engage with retailers, and transform into consumer goods. By 2022, Bellamy’s added markets in Singapore, Malaysia, Vietnam and Indonesia. Also, a baby formula shortage in the United States led to FDA approval and a huge summer contract for Bellamy’s to supply 696 000 cans to that market. The growth is positive for investors and staff alike.
Question:
The change at Bellamy’s has meant that a large international company consumed a Tasmanian company that might have kept growing on its own. A former Bellamy’s executive now working for a different company has asked for your thoughts on why the China Mengniu Dairy Company takeover was necessary and what it means for the people with a stake in Bellamy’s Organic. After reading this chapter, you should have some good ideas to share with your colleague.