Friesland Campina confident on milk formula brand with partner Huishan
Dutch dairy giant FrieslandCampina says it is confident its planned new infant milk formula brand will win over Chinese consumers.
Dutch dairy giant FrieslandCampina says it is confident its planned new infant milk formula brand via a joint venture with China Huishan Dairy will win over Chinese consumers despite the fact it will be produced domestically.
Best known as the maker of imported milk powder brand Friso in the region, the firm hopes to replicate its success with a different, less premium, line produced entirely within the mainland.
“The new brand… is different to Friso but [will be] a good infant formula brand that will meet different stages of nutrition needs,” the firm’s greater China chief executive, James Chiu, said.
“We have more than 140 years of dairy knowledge, Dutch technology, and a very good partner upstream with the same quality as we produce in Netherlands. It’s like BMW in China is all made in China, [but the quality] is just like the ones made in Germany,” Chiu said.
The new brand...[will be] a good infant formula brand that will meet different stages of nutrition needs
Global chief executive Cees Hart said that although the negotiations with Huishan were still under way, they hoped to finalise the partnership by the end of the year.
“We’d like to bring back trust in the local dairy industry,” Hart said. Last November the company announced it would set up the Sino-Dutch Dairy Development Centre with China Agricultural University to conduct research.
FrieslandCampina, maker of the popular Friso baby formula line, generated 11.4 billion euros (HK$112.7 billion) in global sales last year making it one of the five biggest players in the world. Depending on currency fluctuations, it ranks neck-and-neck with New Zealand rival Fonterra, which announced this month it would buy a stake in state-owned milk producer Beingmate.
Competition is intensifying among multinational milk firms as China shows signs of easing its one-child policy and the middle class expands.
FrieslandCampina entered the mainland market just five years ago but is targeting 1 billion euros in revenue from Greater China next year, or about 8 per cent of its total business. Hart said they were well on track to meet that goal.
Hong Kong managing director Arnoud van den Berg said that despite poor overall retail sentiment and increasing tension between locals and mainland tourists, the Hong Kong business was experiencing strong growth.
“Even with developments this year and after the tin-can rule, it has continued to grow. The good news is, the product that is most sought after is Friso and that is available in other markets. It’s exactly the same product as in China or the Netherlands,” van den Berg said.
Asked why consumers still preferred to travel to Hong Kong to buy baby milk powder, van den Berg said: “We are about five years in China and 75 years in Hong Kong so we still have some growth in China. We are in 100 [Chinese] cities but as you know, China is much bigger than 100 cities so many consumers will still buy through the internet or Hong Kong. We are unique in this way that our product is exactly the same. None of the other brands that operate in both Hong Kong and China do it this way.”
