Several Companies Have Announced Cuts Since Beijing Announced Price-Fixing Probe.
Fonterra Cooperative Group Ltd., FCG.NZ +0.13% the world’s biggest dairy producer, is joining the price-cutting trend in China as Beijing investigates possible price-fixing by foreign baby-formula suppliers.
New Zealand’s Fonterra, which doesn’t sell infant formula in China, said it was cutting prices on its Anmum range of milk products, meant for expectant or breastfeeding mothers, by as much as 9% in response to steep price cuts across the industry.
Fonterra is among a clutch of foreign dairy suppliers the government is investigating for suspected anticompetitive practices, in a country where consumer-price inflation is a sensitive issue politically. It isn’t clear why Fonterra is included, as it doesn’t sell baby-milk formula in China; the company, though it has confirmed it’s one of the companies under investigation, wouldn’t comment on the matter.
Soon after the National Development and Reform Commission announced its price-fixing probe on July 4, France’s Danone SA BN.FR +1.18%NESN.VX 0.00%
China is an important growth market for dairy companies and already one of the world’s biggest for infant formula. Research firm Euromonitor International forecasts dairy sales there will hit $46.5 billion in 2016, a 66% rise from 2011.
Demand for overseas dairy products, particularly infant formula, increased after a 2008 scandal in which domestically produced milk powder killed six children and caused illness in as many as 300,000 others. It had been adulterated with the industrial chemical melamine.
Fonterra owned a stake in one of the Chinese firms involved in the scandal, which has since gone out of business.
Source: Â WSJ
Fonterra Cooperative Group Ltd., FCG.NZ +0.13% the world’s biggest dairy producer, is joining the price-cutting trend in China as Beijing investigates possible price-fixing by foreign baby-formula suppliers.
New Zealand’s Fonterra, which doesn’t sell infant formula in China, said it was cutting prices on its Anmum range of milk products, meant for expectant or breastfeeding mothers, by as much as 9% in response to steep price cuts across the industry.
Fonterra is among a clutch of foreign dairy suppliers the government is investigating for suspected anticompetitive practices, in a country where consumer-price inflation is a sensitive issue politically. It isn’t clear why Fonterra is included, as it doesn’t sell baby-milk formula in China; the company, though it has confirmed it’s one of the companies under investigation, wouldn’t comment on the matter.
Soon after the National Development and Reform Commission announced its price-fixing probe on July 4, France’s Danone SA BN.FR +1.18%NESN.VX 0.00%
China is an important growth market for dairy companies and already one of the world’s biggest for infant formula. Research firm Euromonitor International forecasts dairy sales there will hit $46.5 billion in 2016, a 66% rise from 2011.
Demand for overseas dairy products, particularly infant formula, increased after a 2008 scandal in which domestically produced milk powder killed six children and caused illness in as many as 300,000 others. It had been adulterated with the industrial chemical melamine.
Fonterra owned a stake in one of the Chinese firms involved in the scandal, which has since gone out of business.
Source: Â WSJ
