China shortage in infant formula has international impact

Posted by AFN Staff Writers on 4th February 2013

Hong Kong citizens taken action to designate baby milk formula as a “reserved commodity” following insufficient supplies in Hong Kong.

The reasons for the short-term shortage of infant formula in Hong Kong is due to mainland Chinese stocking up on infant formula prior to the upcoming Chinese New Year holiday, when the majority of stores in Hong Kong and China will be closed for ten days.

Following Hong Kong government restrictions on the amount of infant formula that can be purchased, a petition has now been lodged with US President Barack Obama. The Hong Kong government petition is urging the US government to help address the infant formula shortage in the region.

The Hong Kong government has also set up luggage restrictions on public transport and placed a limit of two milk powder cans per person that could be taken back to the Chinese mainland last week. A hotline was also established to allow mothers to place orders for infant formula over the phone before the Chinese New Year holiday.

Although consumers were seen stocking up on a range of goods, infant formula is of particular concern due to safety concerns of food processed in China following recent scandals. In 2008, 300,000 mainland Chinese children became ill due to a melamine milk scandal in China. Since the safety scare, Hong Kong’s well known and well regulated infant formula brands have been in high demand.

Strong demand for infant formula in Australia, the United States and Europe is also being triggered by local buyers on-selling or delivering infant formula products to China.

In Australian supermarkets, the infant formula market is dominated by Pfizers S-26 (42.5 per cent), New-Zealand based Nutrica’s Karicare (27 per cent), Nestle’s NAN (17.3 per cent) and Heinz (6.3 per cent.)

In November 2012, Nestle announced it would be seeking to make an acquisition of Pfizer Nutrition’s Australian infant nutrition business’ brand portfolio. Nestlé already supplies infant formula and toddler milk in Australia under the brands NAN and Lactogen. Pfizer Nutrition supplies infant formula and toddler milk under the brands S-26 and SMA.

The White House petition, which was launched in Hong Kong last Tuesday, requires 100,000 signatures by February 28 to draw a response from the US government.