Chinese yogurt brand Simple Love has completed its Series B funding round at 800 million yuan ($122.5 million) as the startup plans to invest all the new proceeds in the construction of its modern pasture to enhance supply chain strengths.
Existing investors Matrix Partners China, BA Capital, CITIC Agri Fund and Maison Capital re-upped in the new round.
Through the deal, Simple Love also roped in new investors including Sequoia Capital China, Yunfeng Capital, alternative investment manager Proterra Investment Partners and DCP Capital.
The Series B round came less than one year after the startup had secured 400 million yuan in a Series A round led by Matrix Partners China in May 2020. The investment from the previous deal also went to the development of its upstream supply chain.
Since its inception in 2015, Guangzhou-based Simple Love has developed a series of products including sugar-free yogurt, functional yogurt, also known as probiotic yogurt, and yogurt especially designed for children, among others. Its products are available in membership-only retailer Metro AG, e-commerce platforms like Alibaba’s Tmall, and premium supermarkets, such as supermarket chain brand China Resources Vanguard’s sub-brand Ole’.
While cooperating with milk suppliers like Greenfields, China Modern Dairy, and New Zealand’s Fonterra, Simple Love is building its first plant in northern China’s Hebei Province to produce additive-free, low-temperature dairy products. Its new plant, which will start operations this April, is expected to deliver products to over 100 cities largely in northern and eastern China.
Simple Love’s fundraising momentum grew alongside its sales volume despite adverse impacts on retail from the COVID-19 pandemic. The firm said that its annual sales volume increased by over 70% in 2020, registering a compound annual growth rate (CAGR) of a staggering 109% for the recent five years.
The six-year-old startup is seeking to grab a share in China’s dairy market, which is projected to reach $176 billion by 2026, according to ResearchAndMarkets.com.
Although the market keeps expanding amid the growth of China’s per capita income, long-standing domestic dairy majors such as Yili, Mengniu, Bright, and Sequoia China-backed Junlebao – all of which started their businesses around the late 1990s – could pose great challenges for its road ahead.
Besides yogurt products, Simple Love said it is also mulling to launch a fresh milk product line in 2021, further putting itself in direct competition with market incumbents.