Are Australia’s daigou days done?

The recent experience of dairy company a2 Milk suggests that the daigou phenomenon – Chinese personal shoppers buying local Aussie products to resell in China – is unlikely to recover to pre-pandemic levels.

What’s happened?

• a2 Milk reported a 39% fall in daigou sales in the year to end June.
• Since 2019, the value of such sales to the company has plummeted from more than 12 billion yuan a year to less than 3 billion yuan.
• It reports that consumers shifted away from international brands and towards local formula brands during the pandemic, as Chinese tourists and students were unable to travel to Australia. 

Background

• a2 Milk was a prominent brand in the initial daigou wave as food safety scares in China pushed shoppers toward international formula brands, which were perceived to be more trustworthy.
• At the time, a2 Milk’s marketing director attributed its success to having established a strong brand in the category.
• In 2018, Australia opened its first dedicated retail hub for daigou shoppers; at one point before the pandemic hit, there were more than 1,000 such stores. 

What’s changed?

• Apart from the interruption of the pandemic, Chinese regulators have tightened up standards for formula milk, meaning parents are more confident about locally made products.
• Chinese students in Australia no longer have to rely on daigou sales as there’s plenty of demand for casual workers in areas such as hospitality, Asia News Network points out.
• Some sectors will more likely see a resurgence of daigou resellers: in luxury goods, for example, there remain significant price gaps despite brands moving to reassess price differentials between western markets and China.

Key quote

“There (are) a lot of things that are conducive to a daigou recovery. Unfortunately, we’re not seeing a significant rebound in that … (The daigou channel) will not get back to the same size that it was” – David Bortolussi, CEO, a2 Milk.

Sourced from Asia News Network