Provided by NZX
  • FSF6.05

    $0.040.66%

  • Open 6.09 High 6.12 Low 6.05 Bid Price 6.05

    Offer Price 6.06 Value 4732660.76 Volume 779715

Current as of 19/12/14 07:40PM NZST

Christopher Adams

The Business Herald’s markets and banking reporter.

NZ infant formula status at risk, say big players

A mother feeds her baby at shopping mall in Beijing. Booming demand for NZ infant formula means inexperienced companies are trying to cash in - putting our reputation at risk, says the industry's big players.  Photo / David White.
A mother feeds her baby at shopping mall in Beijing. Booming demand for NZ infant formula means inexperienced companies are trying to cash in - putting our reputation at risk, says the industry's big players. Photo / David White.

New Zealand's reputation for high quality infant formula is being jeopardised by inexperienced companies looking to cash in on booming Chinese demand, a high-powered industry group says.

The Infant Nutrition Council - whose members include major manufacturers and marketers of baby milk such as Fonterra, Nestle, Nutricia, New Image and Synlait - is calling for all firms involved in the marketing of infant formula to be required to comply with an agreed set of industry standards.

"Recent media reports have highlighted that companies that lack basic supply-chain integrity are threatening New Zealand's reputation as a producer of the highest quality infant formula and the industry and government agencies must work together to guard that reputation," said Jan Carey, the council's chief executive.

The council says it has a code of conduct its members must adhere to, which aims to prevent false and misleading claims about products and promote food safety standards.

It also supports breastfeeding as the preferred nutrition for babies.

China's 2008 melamine scandal, in which six babies died and around 300,000 became sick after consuming dairy products tainted with the industrial chemical, resulted in the virtual collapse of the country's domestic formula industry and a huge spike in demand for imported products.

With cans of imported baby milk fetching up to $70 a can in the Chinese market there has been an explosion in the number of brands being exported from New Zealand.

Most of brands, which often have Chinese links, do not operate factories but instead have their products produced at contract manufacturing plants in this country.

As the Ministry for Primary Industries approves and regulates the contract manufacturers rather than the companies behind the brands, it has admitted that it doesn't know exactly how many brands are being produced in New Zealand for export.

The number is thought to be well over 200.

A series of news stories broadcast in China by the CCTV network last month highlighted some issues in the local infant formula export trade, such as brands that are produced in this country solely for export claiming in their Chinese marketing to be well-known in New Zealand.

And last year Fernbaby, an infant formula brand exported from New Zealand owned by a group of Chinese investors, was found to have superimposed images of its logo on to a photograph of a Kiwi dairy processing plant that appeared on the Fernbaby website.

The company said it would removed the image - which gave the misleading impression that it operated its own factory - after being contacted by the Business Herald.

One dairy exporter, who didn't want to be named, said the lack of regulation of formula brands was a "ticking bomb".

"It's a stacked deck of cards and if it all comes down everyone's going to get hurt and it will make DCD look like a sneeze."

Carey said New Zealand-made formula was "among the best in the world" and food safety regulations in this country and in China were strict and effective.

"The issues the industry is facing are around some claims that have been made and opportunists seeking exorbitant prices."

Carey said that if the Asian formula boom continued, the opportunity to supply from New Zealand would grow, but feeding that demand had to be properly managed.

"We have to remember we are making food for babies," Carey said. "Infant formula is very delicate and we must make certain that the fears of parents are not exploited for commercial gain.

"Whether infant formula is marketed in New Zealand or overseas, we must do everything to ensure short-term opportunism by some individuals or companies does not damage the trust among international consumers that New Zealand produces safe, healthy and sustainably-produced food."

Guy Wills, general manager of infant formula manufacturer New Image, told the Business Herald last week that Chinese consumers should be assured that products made in this country were of high quality.

"Problems arise when unscrupulous people try to take advantage of that demand from consumers and do unethical things that threaten to spoil the reputation for all," Wills said. "The New Zealand dairy industry is trying to be vigilant, with the help of the Ministry of Primary Industries and New Zealand Trade and Enterprise, to stop that happening."

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on production apcf01 at 22 Dec 2014 03:44:06 Processing Time: 315ms