January marked the 10th anniversary of the sentencing of the dairy workers and company executives involved in the tainted infant milk powder scandal that rocked consumer confidence in Chinese domestic dairy products.
The Melamine scandal, in which infant formula was tainted with the chemical used to make plastics, claimed six infant lives and injured approximately 300,000 other babies in China.
How has the Chinese industry recovered? And what have foreign companies been doing to capitalise in this vast market?
According to an article on dairyreporter.com, the scandal raised lasting concerns about food safety and political corruption in China, after it was alleged there had been a cover up between local officials and the dairy business at the centre of the scandal, Sanlu.
Chinese consumers quickly shunned local brands in favour of foreign infant formulas. Ten years on, the market continues to boom for foreign suppliers and local companies that can source their products from overseas.
Two big Chinese companies, Mongolia Yili Industrial Group and China Mengniu, have been quick to set up foreign milk contracts. Another Chinese owned company (Shanghai Pengxin) now has one of New Zealand’s biggest herds. From this it exports UHT, fresh milk and powders to China under the ‘Theland’ brand.
And some high-profile foreign companies have attempted to cash into the Chinese infant formula market, which is expected to be worth $32 billion by 2023, Danone and Nestle among them.
Australian companies have been a favourite source of formula supplies since the scandal broke. Companies such as A2 have a strong foothold in China now.
Consumer confidence is growing again but the Chinese dairy landscape is now vastly different.