Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors. Race of Milk Powder in China's Market

CRI-report: Since the "melamine incident", the China's milk powder industry enters a relatively chaotic period of adjustment. Due to the huge potential of the domestic market, more and more international brands enter China's milk powder market and the foreign dairy industry begins to fully penetrate into the upstream and downstream of China's dairy industry chain. The importance of China's milk powder market and the reputation crisis of the domestic milk powder further promote the foreign milk powder enterprises to start the layout in China's milk powder market.

"Research Report on China's Dairy Industry, 2011-2012" shows that, the import of China's milk powder showed an increase trend in both the volume and price whose share accounted for over a half of the Chinese market. Some experts even believe that it will continue to rise and is likely to account for 70% or so in 2012. A report on the Chinese milk powder industry displays that in the top ten brands of milk powder in mainland China, 5 are foreign brands which are the high-end products in the first and second-tier cities.

It also shows that the import volume of Chinese milk powder was 140,000 tons in 2008 and it soared to 310,000 tons in 2009, with an increase of 121% YOY; it increased to 480,000 tons in 2010, with an increase of 55%. Currently, in China's milk powder market, Dumex, Mead Johnson, Nestle, Abbott, Wyeth respectively account for 16.76 %, 12.06%, 10.58%, 7.29% and 4.72% according to "Research Report on China's Dairy Industry, 2011-2012" on The market share of domestic dairy enterprises is shrinking. In addition, the domestic milk powder market is faced with the double pressure of raw materials and the market prices. With the advantages of brand influence, research strength, etc., the trend that the foreign milk powder enterprises continue to expand the market share in China is significantly obvious. For domestic milk powder enterprises, it means that the competitive pressures will become increasing large.

The market scale of infant nutrition products in 2010 was about USD 7.36 billion and it is expected that it will increase by 19% in the next six years. It is estimated that in the period of 2011 to 2016, in the field of infant formula milk powder and complementary products, China will create about 90% of the market value in the Asia-Pacific region, accounting for 70% of the increment of the global market, which means that the retail scale of the Chinese market will reach about USD 10 billion. These conditions are all conductive to the continuous growth of China's dairy market and the increasing promotion of the status of the Chinese milk powder market. Accordingly, it becomes an important goal for the future development of large quantities of major brands.

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