European Dairy Gaining Traction amongst Chinese Consumers

1. Some infant formula companies are inclined to have their products made in Europe after Fonterra’s botulism food scandal. 2. Famous brands like Mead Johnson, Nestle, Dumex and Beingmate use country of origin marketing to gain Chinese consumers’ trust. 3. A study comparing pesticide levels in New Zealand and European baby food could further impacts the reputation of NZ exports if viewed outside of a regulatory context.

“New Zealand” country of origin marketing claims for dairy products marketed in China have lost some of their former appeal for customers with the repercussions from last year’s botulism scandal which is still reverberating (see CL food news on 6 Aug 2013). The reputation of NZ dairy produce is excellent, however in the aftermath of this event European country of origin labelling has started to gain favor, despite much of the fears surrounding the botulism incident being largely unfounded. Infant formula investors are looking to the east to find manufacturers based in Europe and existing brands are more willing to market milk sourced in Europe. For instance, China’s leading baby formula Beingmate has printed a Shamrock to infer its Irish origins, on its flagship product. A senior executive from a multinational infant formula company said that “the emotional preference of customers to infant formula products is shifting from NZ to those in Europe; European country of origin labelling means assurance of high quality and safety.”

A recent analysis of a government study revealed that more than 30 percent of NZ baby food contained pesticides residues while just 0.04 percent of European baby foods do. Food safety issues provided the spark that ignited much of China’s current infant formula rush and as such the stark difference in residue levels when viewed in the wrong context could be extremely damaging to the integrity of New Zealand exports. The ability of the NZ government to control pesticide in foods has been the subject of sharp criticism on both domestic and international fronts. Alison White of the Safe Food Campaign states “We want New Zealand to follow the European directives which basically stipulate a zero tolerance policy”. Nevertheless, from a regulatory aspect, almost all infant formula products exported to China is fully compliant with Chinese standards including the pesticide levels.

Chinese parents are already extremely cautious about choosing infant formula brand after going through a series of horrible food safety issues. The quality and safety of imported foods must be absolutely guaranteed to gain their trust which is also key to staying competitive in the Chinese market.