Dairy Products China News

April and May to date have been an especially interesting period in China’s dairy sector, not least with Mengniu finally taking control of Modern Dairy. Kohlberg Kravis Roberts (KKR) did rather nicely out of its investment in the dairy farming business, even if it has accepted a discount to keep China National Cereals, Oils and Foodstuffs Corporation (COFCO) happy as some suggest. In developments elsewhere Bright Dairy & Food has confirmed that its New Zealand powder and formula manufacturer Synlait Milk is planning an initial public offering in New Zealand. Meanwhile the New Zealand government’s operation Asure Quality, which provides food safety and biosecurity services, has just signed a “collaboration framework agreement” with Mengniu and its owner COFCO Corporation to investigate setting up a China-New Zealand agribusiness service and food safety centre of excellence in the dairy processor. In addition, a potentially significant broader development is that Wal-Mart has announced that it is investing RMB100 million (USD16.3 million) to strengthen food-safety management in its stores in China, aiming to expand food inspection, supply-chain management and supplier training.

Improved food safety is a welcome theme in all these corporate developments, just as food safety (or the lack of it) runs through many of this month’s features. It drives the overseas purchasing boom in infant formula whilst providing a supportive environment for Fonterra to launch its Anmum infant formula and PBM its organic infant formula, and an unforgiving environment for Hero Li’er after being caught counterfeiting Nutradefense infant formula. This is unsurprising: the annual consumer attitudes survey from the Pew Institute in 2012 showed the proportion of respondents in China concerned about food safety had jumped to 41% last year from only 12% in 2008 – and this
was before the recent rat disguised as lamb scandals!