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Investing.com -- Danone (EPA:DANO) shares have turned negative during today’s trading session as the market responded to Feihe’s announcement of a new maternity subsidy program set to launch in April.
At 10:50 GMT, shares were down by 0.6%.
The program, which will offer a subsidy of no less than RMB 1500 (approximately €191) to each eligible family, is a significant investment by Feihe, totaling around RMB 1.2 billion (circa €150 million). This move is expected to bolster Feihe’s market position, where it currently holds the lead with a 17.5% share compared to Danone Aptamil’s 14%.
The subsidy program is national in scope and is available to families with one or more children. As the leading player in the market, Feihe’s strategic initiative could potentially increase its market share and put pressure on its competitors, including Danone.
Jefferies analysts commented on the situation, saying, "For a family, this means 6 cans of free formula. The investment is c.6% of Feihe’s turnover. The timeframe is not specified, though, likely a multiyear project we think. They might spend less in other areas to offset the margin impact (co didn’t comment)."
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