DCP, a leading international private equity firm, announced on Thursday it has completed a series C investment in Honest Dairy Group, the parent company of Simple Love Yogurt.

This round of investment is led by DCP alongside co-investors QY Capital, VMC, Guangzhou Finance Holdings and Proterra Investment Partners, with Cygnus Equity acting as the financial adviser. The proceeds will be used to improve Honest Dairy Group's supply chain efficiency and capabilities, product innovation and to create value for consumers.

Honest Dairy, the parent company of Simple Love Yogurt, is a leading dairy company in China focusing on short shelf life yogurt with no additives.

In the past six years, Honest Dairy gained market share rapidly and has achieved a revenue CAGR of over 100 percent. It has become the top short shelf life dairy brand in major supermarkets and hypermarkets.

As consumers' disposable incomes rise amidst a greater focus on health and wellness, China's short shelf life dairy market has been growing rapidly in recent years, aided in part by the development of a cold chain logistics network. In 2021, China's short shelf life yogurt market reached nearly 70 billion yuan ($10.9 billion), but per capita consumption is still relatively low compared with developed markets, implying significant potential for consumption upgrade and market growth.

As consumers increasingly value the health, nutrition, quality and safety of dairy products, high-end short shelf life yogurt has outperformed the overall market with a CAGR close to 30 percent over the past three years, and its penetration rate increased from 8 to 15 percent.

"Despite COVID-19, China's consumption spending trends remain robust. We firmly believe a desire for better quality products is a key driver of demand among new middle-income consumers," said Xia Haitong, founder and CEO of Honest Dairy. "We will continue to focus on its product innovation capabilities, deliver more value for our customers and provide the best quality dairy products."

According to Julian Wolhardt, CEO of DCP, driven by consumption upgrades and the rapid growth of online channels, China's dairy industry will embrace further transformation. "Going forward, DCP will continue to fully leverage our deep operational expertise and rich resources and work closely with Honest Dairy's outstanding management team to bring high-quality, fresh and safe dairy products to consumers," he said.

Kaifusai Julaiti contributed to this story