DANONE Stops Selling Karicare in China

Nutrilon from Holland, Aptamil from Germany/New Zealand and Karicare from New Zealand are the three pillars of DANONE’s lucrative infant formula product lines here in China. However, on 21 Mar, the Chinese operator under DANONE, Nutricia Early Life Nutrition (Shanghai) Co., Ltd, announced on the TMALL Karicare Flagship Store that it will suspend the sale of Karicare in China and concentrate more on the development of the other two brands.

Karicare was released in China in 2011 and has gained considerable traction amongst Chinese consumers and has had estimated annual revenues of almost 4 billion RMB at its peak. There has not been any official explanation from DANONE for this move, although sources at the company have suggested that the move is part of Danone’s strategic adjustment to recent changes in consumer preference and market access requirements.

Mr. Song Liang a dairy industry expert analyzed the possible reasons for Karicare’s withdrawal:

• The performance of Karicare in China has been steadily declining. The prices of Danone’s three main brands are quite similar however European milk sources are preferred by Chinese consumers which has affected the competitiveness of Karicare. Last year, the sales volume of Nutrilon and Aptamil accounted for 70-80% of total sales in China.
• There are a number of Karicare from various unregulated channels flowing into the Chinese market. Some are even counterfeit products which threaten to damage the reputation of Karicare and even the overall reputation of Danone. 
• China’s new infant formula registration rule is to be finalized soon. Both domestic and foreign infant formula manufacturers can sell 3 IF product lines in China. (see CL Food News on 15 Jan 2016). Therefore Danone will likely concentrate their efforts on their other 2 products lines and allow room to develop more tailored niche products in the future.

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