BEIJING: China introduced tough new regulations governing the manufacture and distribution of infant formula products on New Year’s Day and it is expected that the development will work very much in favour of international brands.
They are already perceived by Chinese consumers to offer higher standards of quality and safety following a series of scandals dating back to 2008 when melamine-tainted milk and formula killed at least six infants and caused tens of thousands to fall sick.
And as recently as November, Xinjiang Western Animal Husbandry was found to have produced more than 18,000 cans of infant formula that contained ingredients that had expired.
With Chinese consumers, especially mothers, continuing to worry about the safety of so many generic products on the market, the government crackdown has already resulted in about 1,400 products being removed from store shelves, Bloomberg reported.
Specifically, China’s Food and Drug Administration had approved 940 infant formula products from 129 factories by Thursday last week – whereas more than 2,300 products were on the market before January 1.
“There are so many formulas for infant milk powder in the market,” said Liu Xuecong, Secretary General of the China Nutrition and Health Food Association. “Making formula is random and changes so frequently, and companies put forward so many concepts that consumers find it difficult to choose.”
As the new laws take hold, Bloomberg reported that international brands are positioning themselves to capitalise by targeting parents in China’s second-tier cities and rural areas, where local brands typically dominated.
“We see opportunity in the low-tier cities of China,” said Binu Jacob, SVP of Nestlé’s infant nutrition division in China, which has 17% of the overall market. “We are also reviewing our portfolio to see what products are more relevant to capture this opportunity.”
Meanwhile, French FMCG giant Danone, which has 11% of the market, plans to bolster its direct-to-consumer e-commerce operations as well as introduce technology, such as laser printing, to make tampering more difficult.
“This legislation is really welcomed by us and leaders in the industry because it does represent a move forward in protecting consumers and giving them higher confidence and a higher peace of mind,” said Bridgette Heller, EVP of Danone’s early life nutrition division.
Sourced from Bloomberg; additional content by WARC staff