New Zealand dairy group Synlait has entered into a supply deal with US baby products manufacturer Munchkin for the launch of grass-fed, branded infant formula in the US and China.

Synlait will exclusively manufacture the product, the company announced at its annual milk supply conference in Christchurch today (18 June).

Managing director Dr John Penno explained by opening up opportunities in the US market the New Zealand B2B infant formula maker hopes to reduce its reliance on China, where it generates the majority of its sales. "We are cognisant of ensuring our infant formula business does not become overly reliant on the China market, and so Munchkin, with its focus on the United States market, is a potentially important addition to our growing portfolio of retail-ready infant formula customers," Dr Penno explained.

The raw milk used to manufacture the infant formula is subject to a new grass fed standard co-developed by Munchkin and Synlait. It requires cows to be exclusively grazed on a pasture and crop based diet, with no feeding of grain, or feed not grown in New Zealand. Farmers will be independently audited to ensure they meet, and maintain the standard.

Munchkin CEO Steve Dunn said: "The new standard, and a unique grass fed infant formula line to meet growing consumer demand, particularly in the United States, is a big opportunity for Munchkin. Our forecast gross revenue for FY15 is over US$300m, and we expect the growth of the grass fed infant formula business to contribute significantly to our bottom line over time."

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