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News September 2008

Will Dairy Scandal Open Door For Foreign Companies?

By Peter Bachmann, on 25-09-2008 06:30

Published in : The News, News September 2008

Japanese and Swiss dairy producers have expressed their intention to enter China's dairy market as Chinese consumers increasingly avoid scandal-tainted local products.

Japan's Asahi Breweries has reportedly entered China's dairy market this week with a new high-end liquid milk product, the company's local General Manager Okuhara Nobumasa told local media. The drink is priced between RMB2.10 and RMB2.5 per 100 ml, almost twice as high as the price charged by local producers.

"We believe the liquid milk market, and particularly the high-end sector, has great potential in China," Nobumasa said. It might be the right time to enter the Chinese market, as consumer confidence for local products is low after contaminated baby formula led to four death infants and sickened at least 53,000 children nationwide.

While the Japanese company produces drinks from its Shandong-based joint venture, Swiss dairy producer Emmi has plans to supply the Chinese market with additional products entirely "Swiss made". "The dairy scandal is one more reason why consumers choose our products," spokeswoman Ruth Stadelmann was quoted by business paper Cash. The company exports home-made baby formula, yoghurt and cheese to China and is working to add more products in the premium segment.

Market research firm Euromonitor says China's liquid milk product market grew 14 per cent last year, to RMB108 bn.