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Monthly Digest: China Maternal & Infant Product Industry Review | December 2019

Products launched

1. Ausnutria launched its global edition of Puredo milk powder simultaneously in China, Australia, and New Zealand. In China, Puredo will initially be exclusively sold through JD.com, and will then be available in Tmall Global and other e-commerce platforms.
2. Junlebao launched Zhizhen AII, an end-to-end managed A2 milk powder. Junlebao owns and controls the whole industrial chain and has its A2 cows, pastures, milking parlors, processing facilities, etc. Product sales have already exceeded 100 million RMB($14.3 million) in the first month of trial sales.
3. Australia's Bellamy's Organic and JD Global jointly held a new product launch event for the brand's new infant milk powder in smaller cans of 300g.
4.  Yili launched its first goat milk powder product, "Jinlingguan Youzixiaoyang"(UITSTEKEND GEITENMELK). This is another significant move by Yili and follows the release of its organic milk powder Seine Mouiller in July 2019.  

Regulatory compliance

1. On December 3, China GAC updated the list of enterprises that have been granted infant formula overseas manufacturer registration approval in China. Five countries, including Ireland, Germany, France, Netherland, and New Zealand, are involved in the latest updates.

2. The regulations on the implementation of the food safety law of the People's Republic of China (hereinafter referred to as the regulations), supporting regulation of the Food Safety Law, entered into effect on December 1. The regulations emphasize the establishment of a traceability system for foods targeted at specific populations, such as infant formula foods, and other foods with high safety risks or large sales volume.

3. A notice on the website of Beijing Municipal Administration of Market Supervision on sampling inspection information of food safety supervision in 2019 showed that 269 batches of infant formula products from several dairy companies including Ausnutria, illuma, Aptamil, Nestlé, Firmus(Feihe), Biostime, Beingmate, Wyeth, Abbott, and Junlebao were all qualified.

4. New Zealand dairy company Keytone Dairy said in a statement that it had completed an advanced second production facility in New Zealand that had been licensed by the Ministry of Primary Industry of New Zealand and registered by China's National Certification and Accreditation Administration (CNCA) to produce and export formula dairy products after commissioning.

5. Starting from January 1, 2020, China will impose a temporary tariff rate on imports of more than 850 commodities that are lower than the MFN tariff rate, which covers infant formula, whey, and other dairy-related products.

6. GAC renewed the registration of 9 overseas infant formula manufacturers. Abbott applied to cancel the registration of its liquid infant formula and renewed the registration of one of its milk powder facilities.

Company dynamics

1. Bellamy's shareholders have voted overwhelmingly in favor of the Chinese dairy group Mengniu's takeover. This means that Mengniu is set to complete its acquisition of Bellamy's by the end of 2019 for a total price of about 7 billion yuan($1 billion).

2. Mengniu's Yashili and Bellamy's have signed contracts with China International Import Expo Bureau, becoming the first dairy enterprises from New Zealand and Australia to sign up to the third CIIE in 2020.

3. The board of The a2 Milk Company Limited announced that Managing Director & CEO, Jayne Hrdlicka, has agreed to step down from her role, and the former CEO, Geoffrey Babidge has accepted the role as Interim CEO. Despite the personnel changes, a2 will continue to focus on its core markets in China and the United States over the next three to five years.

4. Fonterra appointed Teh-Han Chow as is interim CEO Greater China, in the wake of the resignation of Zhu Xiaojing, president of Fonterra Greater China. During Zhu’s tenure, Fonterra's Greater China business grew by 300%.
5. The listing status of China Huishan Dairy Holdings Company Limited has been canceled by the Stock Exchange of Hong Kong(SEHK) on December 23, 2019. As the largest dairy farming enterprise in northeast China, Huishan Dairy has been mired in huge debt since 2017, resulting in its suspension for more than two years.

6. Firmus(Feihe) Infant Formula Whole-Industry-Chain Innovation Center was unveiled jointly by the Firmus and Dairy Innovation Team of the Chinese Academy of Agricultural Sciences. The Center aligns with overall policy goals to build a sustainable and revitalized national dairy industry.

Market Data

1. Sales of organic milk powder rose a whopping 77% in 2019, although the category's average price is 49% higher than that of other milk powder, according to Nielsen data.

2. Henan province has emerged as a major hub in China's dairy sector and is now in the top 10 diary provinces in China. Yili, Mengniu, Bright Dairy, Junlebao, and Sanyuan have all set up in Henan, joining local dairy enterprises Huahuaniu, Kedi, Sansege, Sanjianke, and Bonong.

3. Several brands of milk powder, including Firmus(Feihe), a2, and Ausnutria have released price rise signals. The price of Ausnutria's flagship product Kabrita has risen by nearly 10%

4. The total market value of Firmus(Feihe) has risen rapidly from its initial valuation of just north of 66 billion Hong Kong dollars($8.47 billion) to over 80 billion Hong Kong dollars($10.27 billion), just 40 days after its initial listing.

Disclaimer: All images used in this article are from the Internet.

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