China still focus of Australian dairy manufacturers

China still focus of Australian specialist dairy manufacturers

Dairy
CHINA FOCUS: China remains an important focus for Australian manufacturers of specialised products, such as infant formula.

CHINA FOCUS: China remains an important focus for Australian manufacturers of specialised products, such as infant formula.

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China still looms large on the radar of several specialist Australian dairy manufacturers, despite its tightening economy.

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China still looms large on the radar of several specialist Australian dairy manufacturers, despite its tightening economy.

A series of stock market announcements in recent weeks highlights the importance of the market to manufacturers of specialised products, such as organic infant and adult milk powders, goat milk infant formula and A2 milk products.

The manufacturers appear to be unperturbed by China's increasing regulation of milk powder imports.

And the announcement that Chinese giant the China Mengniu Dairy Company plans to buy Australian organic manufacturer Bellamy's reinforces that Australia is still seen as a trusted supplier to the world's biggest dairy import market.

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A2 took its story directly to China last week with investor presentations in Shanghai.

Its CEO Jayne Hrdlicka told The Australian Financial Review,the move on Bellamy's spoke to the interest in the infant formula category in China.

"We think the macro factors mean this is still a very attractive category with a lot of potential in it for those players who can build strong brands," she said.

Ms Hrdlicka said A2's biggest opportunity "is to build a genuine China-based business that recognises the many different ways to engage with consumers".

A2 Milk wants to increase sales to Chinese consumers across both online channels and physical stores.

"We are only reaching a small part of the market through a couple of channels," she told the Australian Financial Review.

In its investor presentation, A2 said it was pursuing the two biggest consumer markets in the world in China and the United States.

In China, this included through its partnership with CSFA Holdings Shanghai, which was the exclusive import agent for its China label infant nutrition products.

A2 said it saw the opportunity in increasing fertility rates in China, following the change to its one-child policy in 2014.

Chinese families prioritised investment in their children above other spending, it said.

The Australian Dairy Nutritionals Group is fast-tracking its plans to produce organic infant milk formula.

It has bought a farm that will be fully certified organic in November 2019 and started improving its existing farms.

It has also bought an infant formula plant from an overseas vendor, which it dismantled and relocated to the company's Camperdown, Vic, site.

The company says it has export permits, certification and customer relationships in place to capitalise on the growing shortfall of organic milk supply.

"Australian Dairy Nutritionals Group is two years into the journey of becoming the second largest premium organic brand owner and milk producer in Australia," it said.

Bubs Australia is also increasing its China focus - for both its goat dairy and organic grass-fed cow milk infant formula.

"This enables Bubs to now operate in the two fastest growth segments of China's super-premium infant formula category," it said in its annual report, released earlier this month.

It has also bought the Australia Deloraine Dairy Group, allowing it to acquire a facility with the Chinese accreditation to allow it to directly export infant formula product lines into China.

In May it entered into a joint venture with one of the largest Chinese-owned enterprises in the infant nutrition industry, Beingmate, making it the exclusive authorised distributor for all Bubs products in China.

Bubs also has a strategic partnership with Alibaba Tmall to give it access to online shoppers in China, and has actively engaged Australian-based Daigous (personal shoppers), who play an key role in building brand awareness in China.

Another Australian powder manufacturer Keytone Dairy announced on Monday that it had received its second order from Walmart China for private label whole milk powder and skim milk powder to Walmart's Sam's Club China.

The second order was received just weeks after the first - and the total value of the orders was $NZ1 million, the company said.

Sam's Club is an American chain of membership-only retail warehouse clubs owned and operated by Walmart in the US, Mexico, Brazil and China.

It has 18 superstores in China.

Keytone's chief executive officer Danny Rotman said the company was extremely pleased with the level of demand from Walmart China in such a short time frame.

"This second order highlights the size of the Walmart China operation, the vast volume of customers it serves in China and the significant opportunity it presents for Keytone."

This story first appeared on Australian Dairyfarmer

The story China still focus of Australian dairy manufacturers first appeared on Farm Online.

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