Fonterra, the world’s largest dairy exporter, has warned it will take up to 18 months before China’s dairy market enjoys a “significant” recovery from last year’s melamine scandal.
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Philip Turner, general manager of Fonterra’s business in China, told just-food that, despite signs of a “gradual” rebound in sales, the market was “still down”.
Fonterra was at the centre of last autumn’s melamine scare after infant formula made by then venture partner Sanlu was found to be contaminated with the industrial chemical.
The New Zealand dairy giant was forced to refute claims that it approved the use of melamine and the scandal led to an impairment charge for the company of NZ$139m (US$94.6m).
Sanlu has since been sold to fellow Chinese dairy Beijing Sanyuan Group and Fonterra is following the likes of domestic dairy groups Yili and Mengniu in relaunching its products in a bid to reassure consumers and revive sales.
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By GlobalDataFonterra is planning a TV and promotional campaign behind its Anlene and Anmum brands in southern and eastern China. Turner said the push was the company’s “next step in rebuilding the business”.
Industry watchers have expressed confidence that China’s dairy sector will soon return to the significant levels of growth seen before the melamine crisi. According to agribusiness analysts Rabobank, China’s dairy sales rose 12.4% in the first quarter of 2009.
However, Turner cautioned it would take at least a year to see significant growth in the market. “Overall, the market is still down. We’re seeing a gradual recovery but it’s hard to tell,” Turner said.
“The market was growing very, very quickly before the crisis: that’s obviously been signficantly impacted by melamine. I don’t think the market has fully recovered but it does appear that confidence is gradually returning. Within the next year to 18 months, we’ll see a return to very substantial growth in dairy demand.”
He added: “Looking to the medium and long term, we’re very optimistic about the prospects of the market here. We see China as one of the most dynamic, strategically important dairy markets in the world.”
