baby formula

Fonterra, a New Zealand-based dairy co-operative, is set to expand its business in China with the introduction of baby milk formula under a pilot project that has already begun in the city of Guangzhou.

Fonterra China and India managing director Kelvin Wickham was quoted by Bloomberg as saying that the nationwide sale of Anmum-brand infant milk powder is expected to begin in 2014.

The baby formula will initially be launched in Shanghai and Chengdu, and then expanded to 70 other cities over the next three years.

Fonterra will employ about 500 new people in 2014 and increase its workforce by over 50% with the expansion of its consumer and farm businesses in China.

China is New Zealand’s biggest dairy customer, having generated revenues of NZ$3bn ($2.5bn) from the sale of dairy products in the year through June 2013.

Wickham said if you want to be a global dairy player, you have to be in China.

"The Chinese consumers are getting stronger and stronger, and they will define the standards for the world and expectations," Wickham added.

Fonterra is making attempts to come out of the damage that it sustained when its baby formula was found to be infected with botulism-causing bacteria in August 2013.

The company was also imposed a fine of CNY4.5m ($740,000) in August in China for violating anti-monopoly rules, and an investigation was initiated by the country’s National Development and Reform Commission for over pricing its products.

With the introduction of baby milk formula, Fonterra aims to enter into baby food market that is currently dominated by Mead Johnson Nutrition, Hangzhou Beingmate and Danone.

Image: Fonterra to launch first baby formula in China. Credit: Fonterra Co-Operative Group.