Dairy Firms Cut Brands in Response to China's New Milk Powder Registration Rules
Yicai Global
/SOURCE : Yicai
Dairy Firms Cut Brands in Response to China's New Milk Powder Registration Rules

(CBN Global) March 23 -- All milk power products sold in China must be registered nationwide from July this year and the number of brands retailed by Chinese and foreign milk producers are to be limited to three, and the number of milk formulas to nine. As a result, Synutra International Inc. [NASDAQ:SYUT], a leading Chinese infant formula company, has cut the number of its brands from over 200 to three, CBN has learned.

The implementation of these new regulations and other food safety acts this year may lead to many small to medium-sized Chinese dairies closing down. Other baby food producers such as Feihe International Inc. [NYSE:ADY] and Beingmate Baby and Child Food Co. [SHE:002570] have already significantly reduced their number of infant formula brands and some of them have exited the market altogether.

Murray Goulburn Co-operative Co., the largest dairy producer in Australia, is investing AUD300 million (USD228.84 million) in a new milk powder factory for the Asian markets. It may join forces with Mead Johnson Nutrition Co. [NYSE:MJN], US manufacturer of infant formula, to ensure compliance with these new regulations, according to senior dairy industry analyst Mr. Song Liang.

China's National Population Development Plan indicates that the number of childbearing women in China will reach a peak over the next decade. The Chinese infant formula market is likely to amount to CNY100 billion (USD15.41 billion) by 2018, CBN analysts estimate.

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