CCM: Proliferation of Foreign Dairy Companies’ Activities in China 04-07-2016

In H2 2015, foreign dairy companies such as Fonterra, Maeil, FrieslandCampina and Morinaga have retained their strategic focus and expanded their businesses in China – 2016 is likely to see this trend continuing.

In 2015, a number of foreign dairy companies invested further in China, either establishing farms directly to produce dairy products locally or cooperating with domestic dairy companies to launch new products. This continued in H2, especially at the end of the year, with an acceleration up notable in their local expansion. Two good examples are Fonterra and Maeil:

Fonterra to Focus on Foodservice and Bakery

On 29 October, Fonterra set up its  2nddairy application centre in Guangzhou (in addition to that in Shanghai), to cope with the increasing demand for its premium Anchor brand from China’s foodservice and bakery markets. “In recent years, such businesses in China have developed rapidly, typically by 20%+ each year”, said Zhu Xiaojing, General Manager of Fonterra Greater China: “Moreover, consumers are demanding high-quality dairy products to be used in these fields”. At its annual meeting in New Zealand on 25 November Fonterra CEO Theo Spierings noted its plan to build the company into a top dairy supplier in China: “In the next five years, our local sales should double to about USD6.8 billion (NZD10 billion, NZD/USD exchange rate @ 0.6796 sourced from on 24 December)”.

Maeil Concentrating on Special Infant Formula

In 2015, Maeil (South Korea) has made export sales of around USD50 million, of which 90%+ came from China. “We aim to enter China’s top 10 infant formula list by 2020”, the company has stated.

On 24 November, the 2015 Maeil Asian Breast Milk Research Centre Forum was held in South Korea. During this event Maeil indicated that its JV – Hangzhou Beingmate Maeil Food Co., Ltd. – will produce 2 special infant formulas: one lactose-free and the other a partially hydrolysed formula (pHF). In addition, it plans to successively introduce its 6 special infant formulas addressing inborn errors of metabolism (IEM) into China and 8 infant formulas.

Other examples of growth by foreign dairy companies in the Chinese market include:


Royal FrieslandCampina N.V. (FrieslandCampina): from 1 January, 2016, all businesses in its Greater China division will belong to a new business group, FrieslandCampina China. In September, group CEO Roelof Joosten noted that the company would expand its product range in China: “In addition to Friso, we will consider UHT milk, cheese, condensed milk, etc.”


Morinaga Milk Industry Co., Ltd. (Morinaga): on 16 October, it established a JV with Zhejiang Mingwang Dairy Co., Ltd. (part of Taiwan’s Want Want Group) in Shanghai, to handle imports and sales of Morinaga’s infant formula from early 2016
“Such developments in late 2015 are just a signal, indicating that next year, more foreign dairy companies will expand further in China”, commented Yuan Yunsheng, Secretary General of the Hebei Dairy Association: “Especially those in South Korea, where the local market is depressed”.

Since 2013, South Korea has seen continuous increases in dairy inventory. By September, the figure was 262,000 tonnes, up by about 40% YoY. Local household expenditure on fresh milk was only USD10.4/month, down by 16.3% over 2012; average household milk consumption was about 4.9 kg, down by 15% over 5.8 kg in 2012.

“As the free trade agreements are signed, dairy products imported into China will be increasingly price competitive, so domestic dairy companies will face greater challenges”, continued Yuan Yunsheng: “They can only survive by differentiating themselves in the market through developing real innovation capabilities”.


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta.


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Tag: Fonterra, Maeil

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