China market of milk see
foreign brands taking control
The reasons
of the outperformance of the powdered milk for baby on China market are known:
a context of suspicion around the Chinese producers, arisen from the scandal of
the melamine in 2008; a rush towards products imported or made by the foreign brands
which see their China market share doubling, of 35 about 70 %; in front of this
peak of demand, rises in prices repeated during the last five years, which
positioned this category at levels of gross margin very superior to the rest of
the market; in view of this profitability, of big investments granted in
marketing and promotion to stimulate an extremely profitable demand.
Authorities want to
protect China market
This
dynamism urged the Chinese authorities to react: launch of a public campaign on
China market to encourage the breast-feeding; penalties for the actors practicing
promotion drives considered too aggressive in hospitals; fines for the
producers accused of price fixing, who had to lower the price rate of certain
references; implementation of new regulations relative to the marketing of
these products, to eliminate the small opportunist producers incapable to
assure quality and traceability; financing brought to the consolidation of the
Chinese actors, to reconstruct a sector capable of rebalancing market shares
with the international producers.
New products on China
market
All in all,
54 international companies obtained this year a license to import some
infantile milk in China, where they are going to face hundred local producers.
If this wild competition can support the growth of the category for the next
years, on the contrary its profitability, in particular for the new incomers,
is not assured. On the other hand, outside this emergent very competed segment
of numerous doubtless more attractive opportunities of value creation for the
international actors on China market.
For
example, new categories of products appear and benefit from a fast growth. The
best illustration is maybe the yoghurt to drink UHT marketed by the Chinese
Bright Dairy.
