NZ formula makers sweet with NZ

“There has been a lot more focus by the Ministry for Primary Industries than by the Department of Agriculture and Water Resources in Australia on the infant formula industry,” she told Rural News.

And the outlook for the NZ industry in China is positive, she says.

Carey is based in Australia, but the council represents the infant formula industry in both countries with key members including Fonterra, A2, Danone, Heinz, Nestle Australia, Synlait and Aspen Nutritionals. It works together on issues of food and safety regulations, false claims and ethical marketing which do not undermine breast feeding.

Carey says the relationship building by MPI and the NZ Government with the Chinese government has been “really good” particularly in view of the value Chinese place on relationship.

Under new Chinese regulations each infant formula manufacturer may only have three brands. The brands had to be registered by January 1 this year.

“The NZ manufacturing sites have been getting their brands registered,” she says.

“It means there are a lot fewer brands of NZ infant formula going into China but the ones that are going in have greater opportunities. 

“While there may be fewer brands the volume of infant formula that will be exported from NZ to China is only going to increase.”

The opportunities for the companies already in China will grow, says Carey.

“I think there were too many cowboys in the industry, too many people who bought their base product from Fonterra and took it to a manufacturer -- so there was a lot of contract manufacturing going on.

“Now the Chinese want individual recipes and they only want three brands per manufacturing site. And they want the manufacturers to be responsible for the brands.

“They want a bit more skin in the game, and to have traceability from the cow to the can. That is really important. The NZ companies are doing that.”

NZ has more manufacturing sites registered for China than any other country. Australia caught up at one stage but now NZ has gone ahead again. 

“Australia and NZ have a number of sites each; the rest of the world has hardly any.”

However sites in the rest of the world are owned by big companies like Nestle and Danone so they are huge operations.

She says Synlait and A2 are examples of the innovative companies that have come from NZ. It shows there are opportunities for other companies, not just the multi-nationals.

They have shares in each other companies and know the farmers they deal with. 

“The relationship – from the milk they use, to the processing, to the can, to the branding is integrated and that’s what the Chinese want,” she says. “Fonterra has always done that too; it has always been very good at that.

 “I think the NZ industry is in very good shape and they are doing a good job... with the support they get from the Ministry for Primary Industries.”

The Chinese markets will keep growing, she says. The loosening of the one child policy in China will mean a lot more Chinese babies.

“As we know 600 million people have been lifted out of poverty in the last 10 years into the middle class and that is going to increase. Middle class is not necessarily the high standard of living we have in New Zealand and Australia. 

“Often the mums aren’t in the same city as the child. They believe the best thing they can do for their child is to work and give their child an education. So breastfeeding is not always an option.”