Royal FrieslandCampina logs growth in first half, bullish on China market

Dutch dairy company Royal FrieslandCampina said it has had a remarkable business performance in the first six months in China and is bullish on growth potential in the country, fueled by rising demand for high-end infant formula from quality-seeking young Chinese parents.

In the first half of this year, Royal FrieslandCampina, the largest dairy firm in the Netherlands, achieved double-digit growth in China. In the latter half, the company said the market competition is foreseen to become more intense but still expects double-digit growth in the country.

"Our China business has done extremely well in the first half of the year. We see a lot of growth opportunities. Our future is very much linked to China and I'm a strong believer in this country," said Jan Derck van Karnebeek, CEO of Royal FrieslandCampina.

"We will continue to focus on investing in this country, including focusing on recruiting more employees as business is growing. The China market is highly important for us," said van Karnebeek, who visited China this week after being appointed CEO on June 1.

Founded in 1871, the Dutch dairy cooperative, which manages the production chain from grass to glass and has more than 10,000 member dairy farmers, said it would focus on quality ahead of quantity.

Its confidence in the China market comes from Chinese consumers, especially young parents that are increasingly looking to provide premium products and experiences to their children.

The dairy company said its business has been run successfully in major Chinese cities such as Beijing, Shanghai and Guangzhou, Guangdong province. It plans to continue to expand its footprint in smaller cities and believes there are plenty of growth opportunities ahead.

"COVID-19 is behind us. In the long term, I'm very positive about the stability of the birth rate in China and the growth prospects of our business," van Karnebeek said.

Royal FrieslandCampina said it has also launched some plant-based products in Europe from the perspective of helping reduce carbon emissions.

Since the pandemic, Chinese consumers have shown higher awareness of health and have consumed more dairy products to enhance immunity. Nevertheless, Chinese residents consume relatively lower volumes of dairy products compared to some major dairy-consuming countries.

China's per capita annual dairy consumption volume is less than one-third of the global average, and there exists significant growth potential, according to the China Dairy Industry Association.

"We should focus more on the unbalanced consumption of dairy products between urban and rural areas in China and continue to help raise the national health level of Chinese residents," said Song Kungang, former chairman of the China Dairy Industry Association.

Meanwhile, Royal FrieslandCampina said Generation Z consumers — born after 1995 and into the 2000s — are leading the new trend of dairy consumption in China. They focus more on the digestion and absorption of dairy products and pay particular attention to various types of dairy products, purchasing scenarios and channels.