Infant Formula Producers' Countermeasures vs. COVID-19 Crisis 02-28-2020

Summary: On 5 February, Danone, Mengniu, Yashili and Ausnutria announced efforts to ensure market supply through establishing environmental logistic channels with the government and offering home delivery services with mother & baby stores.  

With the spread of Corona Virus Disease 19 (COVID-19) from Wuhan in Hubei Province, many cities have been in lockdown, making supply of infant formula (IF) tight. In this context, most producers have been working to adjust their transportation plans to deliver IFs from other regions, with some plants busy in production. On 5 February, several brandowners announced countermeasures to ensure market supply:

  • Mengniu (Stock Code: 02319.HK): under the epidemic, the increased number of transport checkpoints is slowing down logistics. The company is taking advantage of the government-created "Green channel" in Hubei Province, with similar arrangements being put in place in various other provinces (this term means that the government departments dealing with medical treatment, transportation etc. have set up fast-track procedures to provide simple, safe and fast channels for enterprises to reduce their transit time - these arrangements apply to all life-critical items such as animal-based products, feed, fresh vegetables, etc.
  • Ausnutria (Stock Code: 01717.HK): applying to open an interprovincial environmental logistic channel between Hunan Province and other regions; offering 24-hour online customer services; providing home delivery services with its partner retail chains through its online stores on the E-commerce platforms to make up supplies if stores are short
  • Yashili (Stock Code: 01230.HK): resuming production of its IF plants in accordance with local governments' requests, guaranteeing its supply nationwide
  • Shijiazhuang Junlebao Dairy Co., Ltd. (Junlebao): maintaining production of its IF plant; adjusting transportation modes to meet policy requirements in the case of COVID-19; delivering products at designated sites on schedule although being under traffic control; offering 24-hour customer service, sales on e-commerce platform, and storage & logistic service from mother & baby stores          
  • Heilongjiang Feihe Dairy Co., Ltd. (Stock Code: 06186. HK): consistently producing IFs; proactively altering its transportation routes, the business first delivered products at designated areas negotiated with its retailers who would pick up by themselves subsequently; increasing vehicle and frontline operator counts; strengthening health and epidemic prevention promotion on a daily basis; tracing traffic restriction conditions and logistics information; adding shipment numbers to ensure supply   
  • Danone Group (Stock Code: DANO): some staff volunteering to help in recordkeeping, with distributors driving their own cars to deliver products when logistic vehicles were lacking; delivering products at designated sites agreed by stores in the case of blocked roads; establishing a flexible and efficient supply channel with Beijing Leyou Babies to Kids Co., Ltd., BabyBear Babies & Kids Chain Business Co., Ltd., Wuhan Commerce & Trade Co., Ltd., and Wuhan Aimanman Baby Supplies Co., Ltd.      
  • Beingmate Baby & Child Food Co., Ltd. (Stock Code 002570): building up its stocks again (IFs, adult milk formula, nutrition food for infants, children and adults) during the Chinese New Year holiday; providing home delivery services  

You can find out more information about this article at Dairy Products China News February 2020 issue. 

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