UPDATE: CHINA: Race on to build Chinese milk supply - analyst
Dairy companies look to build safe supply chain
Dairy companies operating in China are hotly competing to build a reliable and trusted local milk supply, a leading sector analyst told just-food this morning (2 November).
According to James Roy, senior analyst at China Market Research Group, consolidation in Chinese milk supply is a "big trend" as dairy processors look to emerge from the long shadow of the tainted milk scandals of recent years. By developing a safe and secure supply chain dairy majors hope to rebuild consumer trust in the safety of their products.
"Consumer trust in domestically sourced dairy products has been very low for years, and winning back that trust is hugely important for dairy companies."
To this end, Fonterra announced earlier today it has secured a deal to open an additional two large-scale farms in Hebei Procince, bringing its number of farms in the region to five and completing the first of its planned "farm hubs" in the country. The company said that, once fully operational, the hub would produce around 150m litres of milk per annum.
"The demand for dairy in China is expected to double by 2020 and much of this growth will be met from local production. We need to build a safe, sustainable local milk supply to feed this growth," Fonterra Greater China and India president Kelvin Wickham said.
Wickham revealed the company plans to create "several" more farming hubs throughout China with the goal of producing 1bn litres of milk by 2020.
Creating a secure milk supply is "especially important" for Fonterra "given their association with Sanlu during the 2008 melamine scandal", Roy suggested.
However, he emphasised that Fonterra is one of many companies focused on developing a secure milk supply in China.
"We are seeing a lot of companies make a push to increase control of their supply," Roy said. "One example is Nestle, which is investing about US$400m in a milk facility in Heilongjiang in northeast China - their plan is to use the facility to help introduce modern dairy farming techniques in the area and improve the quality and security of the local milk supply."
Fonterra is ranked in the top 20 among dairy players. However, this is due for the most part to its strong presence in Australasia. The company is looking to diversify, investing in a China-based dair...
Fonterra Brands (New Young) Pte Ltd plans to promote its products by sponsoring cooking events, seminars or competitions and by sharing the recipes with dairy products and butter. The majority of its ...
Over the forecast period, Fonterra Brands (Hong Kong) Ltd is expected to focus its efforts on dominating the supply of dairy products in the foodservice channel. This is likely to be achieved by gener...
Dairy in Philippines industry profile provides top-line qualitative and quantitative summary information including: market size (value 2007-11, and forecast to 2016). The profile also contains descrip...
- Why Nestle is relaxed about the China "drag"
- Focus: Will Danone return to growth in dairy?
- SIAL 2014: Greek yoghurt firm Fage targets Europe
- Comment: Paying the price for eating healthily
- Focus: Why French retail deals could hit suppliers
- SIAL 2014: Premier in talks over US manufacturing
- Symington's acquires Tanfield Foods
- Danone "eyes acquisition of Mead Johnson"
- Heinz silent over Polish factory expansion talk
- Kellogg, Nestle slammed for "chaotic" salt policy