Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

China begins to challenge in domestic infant formula market

China begins to challenge multinationals in domestic infant formula market, says GlobalData
CITIC Agri Fund Management, backed by Chinese state-owned CITIC Group, has recently agreed to buy a 25.18% stake in Hong Kong-based Ausnutria Dairy, one of the leading local suppliers of infant formula in the Chinese market. This clearly marks a change in direction for the government, which has hitherto been focusing its efforts on regulation in this sector, says leading data and analytics company GlobalData.

Local suppliers in China are yet to recover from the melamine contamination scandal in 2008, with parents continuing to put their faith in foreign-made milks even after a decade.

Consequently, the government introduced stringent composition and labeling laws, strict controls on production technologies and plants, and most recently mandated all brands to register through a complex approval system.

While these measures have undoubtedly improved the safety and traceability of infant formulae, they have done little to address the dominance of the multinational suppliers, with the top four – Nestlé, Danone, Mead Johnson and Abbott – holding a combined 48.3% of the market in 2016, according to GlobalData’s report, ‘The Baby Food Sector in China, 2017’.
Valerie Lincoln-Stubbs, Research Director of Baby Food at GlobalData, comments: “The Chinese government has supported local infant formula companies in the form of investment in subsidies, such as that announced in 2013 for leading companies Mongolia Yili Industrial Group, China Mengniu Dairy, Heilongjiang Wondersun Dairy, Feihe International and Treasure of Plateau Yak Dairy.

“However, this has done little to stem the tide towards imported brands. Even the strongest of the subsidized companies, Mongolia Yili Industrial Group, ranks only fifth with just a 6.8% value share of China’s baby food market in 2016.”
Now, the investment by Citic in Ausnutria represents a ramping up of the State’s involvement in the baby food industry, giving it a direct interest in an up-and-coming player focused almost entirely on infant formula, to add to its existing 31.4% stake in China Mengniu Dairy via COFCO Corporation. Mengniu currently holds about 2.5% of the infant formula category via its Yashili subsidiary.
Ausnutria Dairy’s main business is in cow’s milk and goat’s milk infant formula. In 2017, the company reported 43.3% rise in sales to CNY3, 926.5m.

Lincoln-Stubbs concludes: “With the backing of a state-owned investment arm, the future of Ausnutria Dairy looks even more positive. There is a long way to go before the Chinese can wrest back control of their infant formula sector but at least they have made the first step in the journey.”
ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

'Visionary' Leaders: Primary Sector Council Announced

A group of visionary agribusiness leaders is set to help our primary sector capture more value from its work, Minister of Agriculture and Rural Communities Damien O’Connor says ... More>>

ALSO:

Land Report: Issues With Soil Degradation

An environmental report released today has found we are damaging and losing our soils and our native plants and animals. More>>

ALSO:

Water Quality Report: Cause For Optimism

National River Water Quality Trends released by Land, Air, Water Aotearoa (LAWA) this week, reveal that for all river water quality parameters monitored over a 10 year period, more sites were improving than deteriorating. More>>

ALSO:

IMF Report On NZ: Positive Economic Outlook

Minister of Finance Grant Robertson has welcomed the IMF’s Concluding Statement, released following its annual visit, which provides an independent assessment of the strength of the New Zealand economy. More>>

ALSO:

Retail Power Price: Review Panel Named

The Energy and Resources Minister Megan Woods has released the details of who will sit on an expert advisory panel which is tasked with leading a review into the price of electricity in New Zealand. More>>

ALSO:

Increasingly Disruptive Threats: Govt Cyber Security Refresh

Broadcasting, Communications and Digital Media Minister Clare Curran today announced a comprehensive refresh of New Zealand’s approach to cyber security. More>>

ALSO:


Regional Growth: Action Plan To Modernise Taranaki’s Economy

The Provincial Growth Fund (PGF) will invest up to $20 million to help future-proof the Taranaki region by diversifying its economy, creating additional jobs and leveraging off the strong base the region has established through its oil, gas and agricultural ... More>>

ALSO: