Quick Take: Beverage Leader Nets $300 Million From State Food Giant

Chinese herbal tea maker JDB Group has secured a 2 billion yuan ($300 million) investment from state-owned food giant China National Cereals, Oils and Foodstuffs Corp. (COFCO).

COFCO’s packaging unit, CPMC Holdings Ltd., has thus become the second-largest shareholder of JDB, owning 30.58%. The investment amount was determined two months after the unit first announced its interest in August.

The investment “can increase the group’s profitability and consolidate the group’s leading position in the packaging industry,” CPMC said in a filing to the Hong Kong stock exchange on Tuesday.

JDB made a net profit of 1.47 billion yuan last year, up nearly 13%, according to CPMC’s filing. It was one of two producers of the Wanglaoji herbal tea, also known as Wong Lo Kat, a popular beverage that originated in the early 19th century.

But after a years-long dispute with the owner of the Wanglaoji brand — Guangzhou Pharmaceutical Group — JDB lost a series of lawsuits and was forced to pay millions of yuan in compensation. It was also required to stop using the Wanglaoji name, and its own drinks were rebranded in 2012 as “JDB.”

The company has been forced to spend heavily on marketing for the newer brand and for packaging adjustments, and has pushed forward its own string of lawsuits in a bid to regain rights to the Wanglaoji brand.

The latest investment will also help JDB “to enhance the market leading power of JDB herbal tea and promote the healthy and sustainable development of the herbal tea industry,” according to CPMC’s filing.

Contact reporter Coco Feng (renkefeng@caixin.com)