New Zealand dairy giant Fonterra will cut the price of a maternal health milk product in China, becoming the latest firm to respond to Beijing’s investigation into prices in the sector.
Fonterra said it will reduce prices by 9% for its Anmum brand of maternal health milk from 1 August. The firm said the decision was made in a bid to “better meet consumer needs in light of recent industry-wide price revisions”.
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“We are committed to providing high quality, premium imported products to Chinese consumers and we are also committed to being an integral part of and long-term partner to the Chinese dairy industry,” said Kelvin Wickham, president of Fonterra Greater China and India.
Nestle, Danone and Abbott Nutrition, as well as four other companies – FrieslandCampina, Biostime International Holdings, Meiji and Mead Johnson – have all pledged to lower the price of various infant formula products. Cuts outlined by Nestle and Danone will total as much as 20%.
Chinese regulators launched an investigation into the pricing of foreign-made infant formula products earlier this month. Authorities have claimed some companies at the centre of the investigation, which has now expanded to look at the wider dairy sector, were knowingly breaking the law and had instructed staff to delete communications detailing their involvement in the alleged price fixing.
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Biostime admitted last week that its agreements with distributors in China on the price of infant formula could have broken anti-trust rules. The company said it had started to “amend relevant terms in relation to fixed prices and price floors” in the agreements to ensure the contracts complied with the law.
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By GlobalDataBeijing’s investigation comes as China’s infant formula market is booming with demand for foreign-made products driving the sector after a series of safety scares involving domestic companies. However, the Chinese government claims the price of infant formula has jumped 30% since 2008 when the melamine contamination scandal, which involved a number of domestic firms, killed six babies and sickened thousands.
The price of infant formula in China has further come under the spotlight recently after it emerged Chinese consumers, facing a jump in prices at home, were shipping in products from overseas, prompting rationing in markets in Europe and in Australia.
