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Milk scandal benefits domestic and foreign brands

(Xinhua)
Updated: 2008-09-21 21:53

Public affairs director of US producer Wyeth, Xu Haiyin, told Xinhua orders for milk powder in China were up more than 400 percent since the scandal broke. Ninety percent of the company's milk powder was imported.

US rival Abbott, whose baby formula was all imported, was making plans to increase supply in China, said Wang Ling, public affairs director of Abbott.

Similar moves were also underway at Dumex, a baby formula brand under the French food group Danone, according to the company's external affairs director Pu Jiabin. The company has said its milk powder was made in China with imported raw milk.

The world's biggest dairy trader Fonterra, which owns 43 percent of China's Sanlu Group, said Tuesday its own Chinese business had voluntarily recalled one batch of Anmum Materna milk that had been manufactured and distributed under licence by Sanlu using what they believed to be contaminated local raw milk.

Foreign brands such as Mead Johnson, Wyeth, Dumex and Abbott took more than 70 percent of China's market for high-class baby milk powder, according to Beijing-based market research agency CTR in 2007.

Despite the impact of the Sanlu scandal, China-made milk powder still enjoyed price advantages and would hold on to its dominance of the mid and low-end market, said Chen.

Most of the baby formula under foreign brands are sold around or above 150 yuan per 900 grams in China, more than three times the price of Sanlu.

"We should not be too pessimistic. China has a vast low-income population and we'll focus on meeting their demand with cheap, but quality milk powder," said Ma Guowu.

On Saturday, 21 producers of baby formula submitted letters of commitment to the country's quality watchdog, pledging to compensate consumers and take responsible for the care of those who were ill.

China's dairy market would double to reach 20 billion US dollars in 2010, according to a report by consultant firm McKinsey released in 2006.

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