EUROPE – The Finnish dairy products manufacturer, Valio Ltd has said that its consumer-packaged infant formulas have received an export permit from Chinese authorities.
The permit allows Valio to export its powdered infant formulas, manufactured at the Lapinlahti plant, and ready-to-feed liquid infant formula, made at the Turenki plant to China.
This builds on an already established relationship since 1990s when Valio started exporting milk powders and demineralised Valio Demi™ whey powders for industrial use in China.
China forms a strategic market for milk and dairy products with a growing demand for use of milk powders as ingredients in baby food.
“We want to strengthen our position in China as a trusted supplier of high-quality industrial ingredients.
At the same time, we are building a consumer product market.
Naturally, we are looking to generate new revenue, but profitable growth does not happen in the blink of an eye.
Valio is, as of yet, an unknown brand in China, so there is a lot to do. In the first phase, we are engaging in negotiations with potential customers,” said Jussi Mattsson, Valio’s category SVP.
Opening up China
The new permits open up the promising Chinese baby formula market.
The country has been revamping its food legislation and permit procedures for imported food products.
“Competition for consumer attention between dairies is heated.
In China, online stores, markets and baby supply store shelves are filled with choices from dozens of manufacturers.
Valio’s strengths include Finland’s pure natural environment and extremely high-quality milk, provided directly by our owners, 5,000 Finnish dairy farms.
Chinese parents want, most of all, safe food for their children,” said Mattsson.
In 2017, Valio started exporting lactose-free milk powders to China, the first in the market.
Since 2008, Valio has had a Chinese subsidiary, Valio Shanghai Ltd which majorly focuses on baby food, which has extremely high quality requirements for its ingredients, based on taste, composition, microbiological quality, traceability and purity.
Such expansions were enabled through investments including a new powder plant set up by Valio Lapinlahti in 2014.
Surging market, a boon for foreign firms
China’s increasing potential for baby formulas makes it a sales powerhouse for big foreign firms that make infant formula.
Peak births, as a result of the relaxation of China’s one child policy alongside market share gains are factors assuring bigger players of commodious future sales.
According to Euromonitor International, the top four infant formula firms in China are all based in the U.S. and Europe, accounting for 40% of the market.
They are Mead Johnson owned by Reckitt Benckiser, Danone’s Nutricia from France; and the Netherland’s Royal FrieslandCampina’s Friso.
Danone said that its global sales rose 10.8% year-on-year to hit US$7.3 billion in the first quarter of 2018 with stellar performance in China.
The promising market is starting to open-up more than ten years after 6 babies were reported to have died and some 300,000 more fell ill from kidney stones and other complications after drinking Chinese infant formula contaminated with melamine.
The tainted milk ended up in infant formula sold by one of China’s most trusted brands, Sanlu Group.
After the 2010 scandal, Chinese consumers all turned to imported and expensive milk powder brands.