One of the largest sellers of infant formula in China, Beingmate, has seen its profit predictions fall as it deals with the fallout of being associated with a milk powder scandal.
Beingmate sells Kerry Group’s ‘Green Love’ infant formula in China, as well as product for Fonterra. However, last year its name was drawn into controversy when its name was illegally used on repackaged cheaper formula. Police in China found thousands of empty infant formula containers and printing and labelling materials last September.
The negative fallout has seen Beingmate’s profit predictions turn into a loss prediction of over US$30m. It has previously predicted profits of US$14.8m.
Fonterra invested almost US$500m to buy an 18% share in Beingmate in 2015 for route to market in the Chinese infant nutrition market.
Kerry launched its ‘Green Love’ formula in China in late 2014 and entered an agreement with Beingmate to distribute the product. Green Love was the first infant milk formula to be wholly developed and manufactured by an Irish business and is sold in China as a premium infant formula product.
This is not the first time Beingmate has seen its finances struggle. In August 2015, Beingmate Baby and Child Food company saw its shares fall to their lowest since February 2013, shares dropping 10%.
Ireland is the second biggest supplier of formula to China, with approximately 17% of the infant formula market in China, only behind the Netherlands which has over 30% of the market.
China has been earmarked by many dairy companies as the key market for infant formula sales, with a growing middle class and increasingly western diet.