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
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Tag: infant formula dairy