Danone seeks to thwart China infant formula grey market with online retailer link-up

By Gary Scattergood

- Last updated on GMT

The deal comes a month after more stringent infant formula laws were introduced in China. ©iStock
The deal comes a month after more stringent infant formula laws were introduced in China. ©iStock

Related tags Infant formula

Danone’s Milupa Nutricia has signed a deal with online retailer windeln.de to better distribute its Aptamil infant formula brand in China as it seeks to thwart the booming grey market.

Several countries, most notably Australia, have experienced shortages of infant formula as Chinese ‘daigou’ – or professional shoppers – empty supermarket shelves and sell it on to parents in China.

Last year Aptamil was forced to apologise after the press highlighted shortages in Germany, with the company responding by stating: “We don’t encourage these exports and we don’t sell to Asia. These customers buy directly from German supermarkets,”

Chinese demand for Australian and European infant formula has grown considerably in recent years, triggered by the 2008 scandal when a number of Chinese dairy companies were found to be selling formula contaminated with toxic melamine.

The new deal between Milupa Nutricia and windeln.de – an online site that focuses on baby and toddler products - will lead to the Aptamil brand being available directly from its Chinese website and via its recently opened e-commerce Tmall global flagship store.

The two companies say the partnership will improve the availability of the brand in Germany and ensure controlled distribution to China.

Nichole Duttine, sales director Germany for Milupa Nutricia, said German demand would now be satisfied by meeting Chinese consumers’ needs at source.

“Milupa Nutricia is doing everything to ensure that parents that live in Germany can buy our high quality products. In addition to various measures to improve the product availability – including Aptamil reservation services, our goal is to further reduce pressure on the shelves in Germany and Europe by satisfying the Asian demand where it originates,”​ she said.

“This also helps to ensure that parents in China can receive our high quality products through safer delivery routes via retail partners like windeln.de.“

Konstantin Urban, founder and Co-CEO of windeln.de, said the partnership was an important step for the company to expand its business in Germany and China.

“After the supply of Milupa products for Germany is ensured, we can continue to satisfy the demand of our Chinese customers for high-quality German baby food,” ​she said.

“We will support this by specific marketing measures in the social networks in China. Together with the opening of our Tmall Shop in July 2016, this is an important milestone for our future in China and will further increase our revenue with Chinese customers.”

Tighter rules

The deal comes a month after more stringent infant formula laws were introduced in China.

Both domestic and foreign companies will soon be restricted to three product lines with a maximum of 3 formulas per line.

Products are also now subject to formula registration, whether produced in China or imported into the country, and recipes must be pre-registered with and approved by the CFDA.

Meanwhile labelling requirements have been tightened to ensure the country of origin is stated and restricting the use of general terms such as ‘imported milk source’.

Most analysts expect the new laws to favour international firms, which typically only have a small number of lines, while barring local companies from packaging the same formula under many different brands.

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