Far East digest

New policy will wipe out 80% of infant formula produced in China

By Dominic Morgan

- Last updated on GMT

New policy will wipe out 80% of infant formula produced in China

Related tags: Infant formula, Trademark, Brand, China

China’s tough new “one brand, one formulation” policy for its infant formula market will eliminate over 80% of domestic products currently on sale, according to government calculations.

There are currently over 2,000 domestic formula brands on the market in the country, according to data from Sohu.com, but officials from the China Food and Drug Administration (CDFA) predict that this number will be cut to around 400 once the new regulations are implemented.

The new Regulations on the Administration of Formula Registration for Infant Formula​ will require every infant formula brand produced in China to be registered with the CDFA before being sold, including a full list of ingredients.

To gain CDFA approval, each brand must have a unique formulation with at least six nutrients different to those of any other brand. This has been dubbed the “One Brand, One Formulation” policy.

Around 40 different nutrients are commonly used to make formula by Chinese manufacturers, according to Sun Baoguo, vice-principal of Beijing Technology and Business University, and around half of these are integral to every product. 

Most products are therefore distinguished only by the 20 remaining supplements they contain.

As each brand must have six nutrients different from any other brand, it is likely that companies will only be able to register a maximum of three brands in future, and the number of brands on the market will be cut dramatically.

The new rules are designed to tackle the proliferation of brands offered by Chinese infant formula manufacturers, according to Ye Jiayun, editor of Dairy Products China News​:

It is common in China for identical or near-identical infant formula to be sold under several, sometimes dozens of different brand names, said Ye.

Manufacturers will often produce formula in huge batches to cut costs, then sell any leftover formula to distributors at a low price. The distributors then package this leftover formula into many different ‘sub-brands’ to sell in different regions of China​.

The distributors often agree only to sell the sub-brands in certain regions so the other markets are reserved for the higher-priced, ‘original’ brand sold by the manufacturer​.

It is this ‘distributor-orientated’ production style that the CDFA is trying to eliminate with the new regulations, since it confuses consumers and makes it difficult for the government to control the market​.

This is why the rules also state specifically that from now on all brands must be sold nationwide​,” Ye added.

The new regulations ​will only target brands produced in China, meaning that foreign producers and even some large Chinese companies that produce their formula overseas will not be affected.

However, a number of experts are already calling for the regulations to be extended to imported products.

The government should also be stricter with cross-border ecommerce and apply the same rules to imported infant formula​,” said Liang Song, special economic analyst at the Xinhua News Agency.

  • Dominic Morgan represents CCN​,​ a leading market intelligence provider for China’s dairy market

 

Mars selects China to open first food safety research centre

Mars has opened a food safety centre in China, its first facility for pre-competitive research and training that aims to “raise global food safety standards through collaboration​”. 

Mars

Located north of Beijing in Huairou, the centre will employ around 30 associates, plus a variety of sabbatical positions open to academic and regulatory researchers. 

“Unlike an R&D or innovation centre focused on product development and improvement, the Mars Global Food Safety Centre is a state-of-the-art facility dedicated to advancing food safety research through collaboration and the pre-competitive sharing of information,” said David Crean, vice-president of corporate R&D. 

We firmly believe that in order to ensure generations of families have access to safe and nutritious food, we must work together to evolve food safety management programs and create robust, sustainable supply chains​.” 

Mars said it had selected China for the centre to “leverage the intensive scientific focus the region is bringing to food supply and safety issues today”, as well as for its burgeoning role in the global market. 

The facility will house analytical chemistry and microbiology laboratories, interactive training laboratories and a conference auditorium to enhance knowledge sharing.

Food safety is a global issue that concerns us all—business, governments, academics and the world’s population​,” said Grant Reid, president and chief executive of Mars. 

Working together across all disciplines is the only way we can truly advance efforts at scale, with the ultimate goal of increasing access to safe nutrition for billions of people around the world​.”  

He said the centre will promote its findings through scientific forums and media platforms and events to help advance others’ research efforts.

China to become biggest beer market by value in two years

Already the world’s biggest beer market by volume, China is expected to also become number one in sales value by 2017, according to a report by Research and Markets.

beer

In 2014 the beer market had grown to be worth Rmb486bn—compared to Rmb291bn in 2010. 

This is due to the fast increasing disposable income coupled with a growing population above drinking age in the country, the analysis company reported.

By 2017, China’s beer market is projected to grow by 45%, moving ahead of the United States, which is currently the world's largest beer market in terms of value. 

At present, five key beer groups form 80% of the market: Carlsberg China, China Resources Snow Breweries, Anheuser-Bush InBev, Tsingtao Brewery, and Beijing Yangjin Beer. 

Research and Markets predicts that the Chinese beer market will see players strengthening their brand positioning, new products launch, and distribution and cost control over the next few years.

Related topics: Policy, Food safety, East Asia, China, Dairy

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