CCM: FrieslandCampina Joins Hands with to Develop Rural Infant Formula Market 09-28-2016

On 17 June, Royal FrieslandCampina N.V. (FrieslandCampina) officially signed a MOU with Suning Commerce Group Co., Ltd. (Suning) in Nanjing. In the next year, the companies will cooperate to develop rural E-commerce business and at the same time help to alleviate rural poverty.



Source: Baidu


“We will enlarge our investment in China,” stated Roelof Joosten, CEO of FrieslandCampina, “Demand will grow faster in rural areas with the 2-child policy. In addition, the formula registration policy will make waves in the industry. A large quantity of regional brands claiming shares in rural areas will be phased out.”


This year the company plans to:


  • Select 20 pilot counties / poor villages from 1,500 newly established Suning stores (physical, "bricks and mortar" shops) to donate infant and maternal milk formula and milks


  • Open 20 “Mom Classes” to offer training in mother and baby nutrition and nursing, and child diets


  • Fully cover rural consumers of Suning.com's physical stores with online video-based classes and e-books, with 20 professional consultants offering nutritional advice


  • Partner with Suning and the China Foundation for Poverty Alleviation to initiate the “Love Maternity Matron” public welfare programme to take targeted measures in poverty alleviation: the 1st year is to provide group training to 100 women from poor villages in Anhui, Henan, Hebei and Gansu provinces about maternity, mother and baby nutrition and nursing, and early childhood education


To expand rural market and 3rd-6th-tier cities by giving full play to E-commerce business


“The cooperation is aimed at making use of Suning’s full channels in rural areas and its O2O advantage (Suning.com and Suning.com physical stores) to expand the rural infant formula market, increase the coverage in rural areas and gradually introduce products based on rural consumers’ demand,” said Roelof Joosten.


In 2015, FrieslandCampina made sales of USD1.1 billion (EUR1 billion, EUR/USD exchange rate at EUR1.00=USD1.1335 on 23 June, sourced on hexun.com) in the Greater China region, with double-digit growth which is expected to continue in 2016. “In 2010, we sold thousands of boxes of infant formulas on Suning.com (specifications varied: 900g*12/case, 1,200g*3/case). This year the figure has to date already reached 100,000+ boxes.” 


In 2008 when FrieslandCampina launched its Friso infant formula onto China, many international dairy companies were already more advanced in their penetration of the market. “Fortunately, we did 2 things right: giving full play to E-commerce business and stressing the importance of consumers’ word-of-mouth recommendations,” continued the CEO.




Currently, 40% of Friso's sales are on E-commerce platforms (notably Suning.com, JD.COM, Tmall.com and YHD.COM - mother & child stores also have online stores). As E-commerce is developing, the operators' logistical capabilities are gradually covering rural areas, offering huge potential for them and their suppliers of products such as foreign infant formula.


Pan Min, General Manager of Redbaby.suning.com (a specific mother and baby E-commerce platform under Suning.com) said that nowadays there are no big differences between 1st/2nd-tier cites and 3rd-6th-tier ones - some counties/ rural areas show stronger demand for foreign developed brands. This subverts the "received market wisdom" that rural consumers prefer local products.


“We will mainly serve mothers and babies in rural areas during our cooperation with Suning. However we will market other dairy products based on rural consumers’ demand, such as UHT milk, milk beverages and cheese,” indicated FrieslandCampina.


In order to better meet demand from rural consumers, the company is also stepping up its related R&D and promotions. In its partnership with China Huishan Dairy Holdings Company Limited (Huishan Dairy) it will launch Dutch Lady infant formula later this year, and jointly introduce new products including UHT milk and milk beverages. “We will rely on milk from Huishan Dairy’s own farms and our independently developed technology for quality control, to jointly exploit the rural and 3rd-6th-tier markets. This is a long-run strategy,” announced Roelof Joosten.


                                                                                         Suning Stores Around China

                                                 

                                                                                   Source: Baidu

 

This article comes from Dairy Products China News 1606, CCM




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. CCM is a brand of Kcomber Inc.

 

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Tag: infant formula  dairy

 

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