Fonterra spreads infant formula sales in China

Fonterra's Shanghai-based president for greater China and India, Kelvin Wickham, said the Anmum roll-out was still in its "pilot phase". Photo / AP

Infant formula available in two more cities as company bids for bigger share of multibillion-dollar market.

Fonterra has extended sales of its infant formula brand to two more major Chinese cities as it pushes to secure a share of the world's fastest growing baby milk market.

The dairy co-op launched its Anmum formula in the southern Chinese city of Guangzhou late last year before extending sales to around 100 stores in Chengdu and Chongqing in January. It is also available in Hong Kong.

Prior to the launch, Fonterra did not have a presence in China's branded infant formula market, whose retail sales are projected to reach US$27 billion ($32 billion) by 2017.

Fonterra's Shanghai-based president for greater China and India, Kelvin Wickham, said the Anmum roll-out was still in its "pilot phase".

The company's botulism false alarm had not affected the formula launch in China, he said, as it began after the scare.

"We're keeping it very low-key and learning quite a lot," said Wickham. "We're on track with the initial projections."

He said China's infant formula market was becoming more competitive as the Chinese Government introduced regulatory changes aimed at restoring consumers' confidence in baby milk products.

Big multinational players were increasing marketing, such as online advertising campaigns.

"It's a big market, but it's very competitive and there's a lot of resources being applied by some very significant players," said Wickham.

China's retail infant formula trade is highly fragmented compared with the rest of the world, with a large number of players competing for market share.

But regulatory changes are expected to consolidate the market and reduce the overall number of brands on offer.

Wickham said he believed there would still be a place for Anmum in a Chinese market that became more consolidated.

"At the end of the day consumers will decide here in China."

Fonterra chief executive Theo Spierings said last year he expected Anmum infant formula to be available in 70 Chinese cities within three years.

As part of the new Chinese regulatory measures, officials from China's Certification and Accreditation Administration will audit New Zealand dairy factories this month, including those operated by Fonterra.

Wickham said: "As long as we pass all the audits and the like under way then we have no reason to believe we can't continue to supply base powder and finished goods for people in China just like we do elsewhere in the world."