The Business Herald’s markets and banking reporter.

Infant formula company wants $78 a can in China

Fernbaby will have its logo on the Vodafone Warriors' shorts in the 2014 and 2015 seasons. Photo / Sarah Ivey
Fernbaby will have its logo on the Vodafone Warriors' shorts in the 2014 and 2015 seasons. Photo / Sarah Ivey

A Chinese-owned infant formula maker that has emerged as a sponsor of the Vodafone Warriors has bold plans to commence exports to China, where it plans to sell its New Zealand-made formula for $78 a can.

Auckland-based Fernbaby - which will have its logo on the rugby league team's shorts in the 2014 and 2015 seasons - is aiming to send 80,000 to 100,000 cans of its product to the Asian superpower each month by the end of this year.

One industry source said the target seemed "do-able", but added that the 398 RMB ($78) per can price Fernbaby planned to charge in China was expensive compared with other products already on the market.

At $78 a 900g can the firm's trade with China could be making close to $8 million a months if it meets its targets.

Fernbaby is the brainchild of Chinese businessman Tianxi Shao, who is also the managing director of Sotx, a manufacturer of badminton sports equipment in China.

Tianxi said the 2008 melamine scandal - in which six Chinese babies died after consuming milk and formula tainted with the industrial chemical - had partly prompted the founding of Fernbaby.

Since the melamine disaster imported formula products, which generally sell for between $20 and $30 a can in New Zealand, have commanded a hefty premium in China.

New Zealand supermarkets have even placed limits on the number of cans of formula a single customer can purchase after canny online traders began selling locally bought formula to Chinese parents via the internet.

"Chinese parents [have become] more focused on the quality of baby products so that is the opportunity for us," Tianxi said through an interpreter after an event held to announce the Warriors sponsorship yesterday.

He said part of the reason for the high cost of the Fernbaby product in the Chinese market was the "long supply chain" from New Zealand to China.

According to the Companies Office Tianxi, who is based in New Zealand, is one of four Chinese shareholders in the formula maker, which obtains its raw materials mostly from dairy co-op Fonterra and manufactures its products at contract facilities in Auckland.

Fernbaby assistant director John McCaulay said the Warriors sponsorship was part of the company's strategy to create a domestic and global brand built on New Zealand's reputation as a supplier of top-quality food products.

The company said it was already selling its formula in a number of supermarkets in this country, including some New World stores, where a can retailed for $29.99.

Auckland's Biopure Health sent its first consignment of baby formula to China in June and has begun opening a network of retail stores in that country.

Canterbury dairy processor Synlait, which is majority-owned by Chinese food giant Bright Dairy, began selling its New Zealand-made brand of formula in China late last year.

- NZ Herald

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