China’s health-conscious consumers push liquid milk imports to ‘major milestones’ at expense of infant formula

Name: How Feihe survived the 2008 tainted milk scandal and became China's largest baby formula company
Uploaded: 2021-02-26T21:30:08.000Z
Duration: 3 min 54 s
Description: How Feihe survived the 2008 tainted milk scandal and became China's largest baby formula company

The average consumer in China drank five times as much milk last year than in 2012, with both exporters and Chinese dairy companies benefiting from the demand

Liquid milk sales from New Zealand, the European Union and Australia boomed last year, but demand for infant milk formula continued to slowly decline

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China’s strong demand for overseas-made infant formula started in 2008 after the so-called melamine scandal, when 300,000 children were poisoned after drinking contaminated products. Photo: Bloomberg

Su-Lin Tan

Published: 5:30am, 27 Feb 2021Updated: 6:08am, 27 Feb 2021

A growing awareness among Chinese consumers about the health and wellness benefits from drinking milk helped imports hit two “major milestones in 2020”, as the trade avoided coronavirus-related headwinds and political risks.

Chinese appetite for milk has historically been low due to a genetic lactose intolerance, but last year in China, the average consumer drank nearly 30kg (66lbs) of milk, five times the 6kg (13lbs) downed in 2012, according to research firm Daxue Consulting.

Both exporters and local Chinese dairy companies, such as Yili and Mengniu, are benefiting from the strong demand, in particular for long-life milk, according to Rabobank senior dairy analyst Michael Harvey.

“Liquid milk imports into China notched up a couple of major milestones in 2020, with September last year the first time more than 100,000 tonnes of liquid milk have been imported in a calendar month,” said Harvey.

“Last year was also the first time that China has imported more than one million tonnes of liquid milk in a calendar year.”

In the EU, there have been a number of lockdowns and other measures related to the pandemic which have reduced consumption within the EU bloc

Michael Harvey

In contrast, Chinese imports of another milk product, infant milk formula, from key markets such as New Zealand and Australia have slowed as so-called personal courier or daigou shoppers are unable to travel due to coronavirus-related travel restrictions, combined with a slow shift in demand back to locally made formula and a falling birth rate, the latest financial results from formula manufacturers show.

The once highly lucrative New Zealand and Australian infant milk formula industry, made possible by daigou who package products in small quantities and ship them to friends and family in China, has been slowly softening since a Chinese customs crackdown around three years ago.

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How Feihe survived the 2008 tainted milk scandal and became China's largest baby formula company