Bellamy to Exploit China Infant Formula General Trade Channels through Registered Proxy

Australian infant formula manufacturer Bellamy will attempt to cash in on infant formula general trade channels in China by authorizing another manufacturer ViPlus to use its brand name. Bellamy’s has been unable to register an infant formula product in China, and the move is an attempt to exploit the solid reputation of the Bellamy brand while circumventing regulatory requirements which have seen it unable to sell new product in China through general trade channels since 1st January 2018.

On Apr. 24, 2019, Bellamy announced that a new Bellamy’s branded infant formula product line was to be produced at the ViPlus Dairy (ViPlus) facility. The product line has already been granted registration approval by China SAMR and it was awaiting final certification ^[1]. Stimulated by this inspiring news, Bellamy’s share price jumped to 11.29 Australian dollars per share that day, representing a 17.36% increase. However, after our investigations we have discovered that the product is not a new formula and just involves a slight tweak in the registered information (basically just a change of name) of a previously registered Viplus product.

Infant formula alteration by Viplus

On Apr. 26, China SAMR unveiled the detailed information related to Viplus’ infant formula alteration ^[2], including:

The product name was changed from “ViPlus” to “BELLAMY’S ViPlus”
The trademark presented on principal display panel was changed from “ViPlus” to “BELLAMY’S”, “贝拉米”, “B”
“Halal” certification was removed on non- principal display panel
Pattern and product name’s position changes on principal display panel

There is actually no difference in the product formula, quality, nutritional content etc. between the old Viplus product and the new infant formula product co-branded by Bellamy and ViPlus.

China Dairy Experts Believe the Rebranding Could Mislead Chinese Consumers

According to prominent China dairy industry expert Wang Dingmian, “Bellamy’s is an extremely well-known brand in China and obviously far more famous than ViPlus. According to market data, Viplus has performed poorly in China. Bellamy’s has no registered products and is therefore prohibited from marketing products through general sales channels which means mother care stores, pharmacies, standard ecommerce etc. which account for greater than 80% of all retail sales of IF are all off limits. The use of the Bellamy name on a Viplus product could deceive Chinese consumers and mislead them into thinking they are purchasing a genuine Bellamy’s product.”

Motivation

Bellamy is attempting to circumvent China’s regulatory requirements which have seen any new product unable to access general trade channels in China since 1^st of January 2019. According to a Bellamy's interim report released in 2018, reduced China sales have been a huge factor in their recent downturn. The application for product registration was submitted by Camperdown for Bellamy's brand in December 2017, however, there is no further update on the approval at this time. Bellamy’s cooperation with Viplus is a huge gamble, and if the optics of the situation change to where Chinese consumers become aware or feel that Bellamy’s has tried to deceive them, then the Viplus cooperation could backfire on Bellamy’s and seriously damage their brand image in China and undermine future market entry of product manufactured at their Camperdown facility.