Theo Spierings says the 2008 melamine scandal has not affected Fonterras growth in China

Theo Spierings says the 2008 melamine scandal has not affected Fonterra's growth in China

Fonterra CEO Theo Spierings has said the dairy giant wants to double its sales in China by 2020.

Spierings, a former Friesland Foods executive who became Fonterra chief executive in September, told Bloomberg Television that the New Zealand dairy giant currently has 10% of the dairy market in China and is set to grow as dairy consumption in the country skyrockets.

"We would like to grow with the market and not lose volume and value share", he yesterday (24 November).

China is seen as a growing dairy market but the sector has had its problems in recent years. 

The 2008 melamine scandal, when milk powder contaminated with the chemical killed six infants and sickened thousands, hit consumer trust in local dairy companies. Local dairy firm Sanlu Group, in which Fonterra held a 43% stake was at the centre of the scandal although the New Zealand company denied approving the use of melamine in the the Chinese group's dairy products.

Sanlu was sold to fellow Chinese dairy Beijing Sanyuan Group shortly afterwards and the brand name ceased to exist.

Spierings said Fonterra had taken "learnings" from the scandal, such as applying an integrated production model, where it controls every aspect of the supply chain, but says it has not affected the perception of the company among Chinese consumers.

He said: "The Sanlu brand has disappeared. The activities we have, they are not affected at all."

Fonterra has expanded its operations in China in the wake of the melamine scandal and looking to run its own local milk production. The company already has two farms in the country and is looking to build a third. In June, it announced plans to issue a bond in Hong Kong to raise funds for growth in China.