Fonterra’s ‘game changer’ infant formula deal

New Zealand dairy co-operative Fonterra has announced a partnership with a leading Chinese infant food manufacturer Beingmate that it says will help meet China’s growing demand for infant formula.

The infant formula market in China is worth about NZ$18 billion today and is expected to be worth NZ$33 billion by 2017. The move is seen as an attempt by Fonterra to strengthen its position in the lucrative market.

Bord Bía’s Alan O’Brien, who is based in Shanghai, has said that demand for imported infant formula in China continues to increase, having grown by 16% in 2012 and a further 34% in 2013 to reach 122,734 tonnes, driven by low consumer confidence in local production and increasing demand from the higher-income burgeoning middle class.

Fonterra Chief Executive Theo Spierings said the partnership between two leading dairy nutrition companies will be a game changer that will provide a direct line into the infant formula market in China, which is the biggest growth story in paediatric nutrition in the world. The partnership will also play a part in promoting leading product quality and safety standards in the infant formula market in China, participating in the ongoing development of the Chinese dairy industry, and supporting the development of Beingmate’s business.

“By working together with Beingmate, we will strengthen our infant formula brand presence in China and link China to high quality ingredients from New Zealand, high value paediatric products made at Darnum in Australia, and whey specialty ingredients manufactured at our new plant in Heerenveen in the Netherlands and in alliance with Dairy Crest in the United Kingdom,” said Theo. “We will also work with Beingmate to evaluate mutual investments in dairy farms in China.

“This will be another milestone in our strategy to create additional demand for ingredients and high-value paediatric and maternal nutrition products made from our New Zealand milk, complemented by milk drawn from our other international milk pools.

“China is our number one market and the proposal to join forces with Beingmate will be an important building block in Fonterra driving volume and value, and taking a step forward in terms of being a globally relevant co-operative.”

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