Snow Brand to merge with Nippon Milk Community

“We estimate that the domestic milk market, in which Nippon Milk Community operates, will continue to experience a downturn in consumption,” said Mizuho Securities analyst Hiroshi Saji following earlier media reports of the Snow Brand deal.

“We believe there’s a possibility of further reorganisation within the industry,” he said.

The merger will “allow Snow Brand to expand its base for procuring milk and would be positive for its earnings,” said Yoshiyasu Okihira, an analyst at Credit Suisse Group.

Snow Brand and Nippon Milk Community would have combined annual sales of ¥534bn ($6bn), giving it a similar scale to Morinaga Milk, which posted ¥587bn in revenue in the financial year that ended last March (2008).