Baby formula sector revamp soon

China on Friday unveiled the blueprint for consolidation of its fragmented infant formula industry and indicated that the sector would have 10 manufacturers with annual sales revenue of more than 2 billion yuan ($160 million) by 2015. Geng Guoqing / For China Daily

China on Friday unveiled the blueprint for consolidation of its fragmented infant formula industry and indicated that the sector would have 10 manufacturers with annual sales revenue of more than 2 billion yuan ($160 million) by 2015.

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The sectoral revamp would be undertaken in two phases, said Gao Fu, an inspector in the Ministry of Industry and Information Technology. According to the plan by 2015, the top 10 domestic baby formula manufacturers will account for 65 percent of the market share, up from the current 45 percent. By 2018, there will be three to five manufacturers with more than 5 billion yuan in annual sales revenue. The market share of the top 10 companies will grow to 80 percent in the same period.

Currently, six of the 128 baby formula manufacturers in China have annual revenue of more than 2 billion yuan.

The main highlight of the plan, however, is to ensure that baby formula manufacturers use the raw milk produced on farms owned and controlled by them. Ministry officials indicated that by using advanced quality control techniques, the companies can also ensure that they get better returns.

Most of the baby formula enterprises certified by the China Food and Drug Administration have high quality assets, said Song Liang, a Beijing-based dairy industry analyst. The restructuring plan unveiled by the government has set attainable goals and ensures that these companies can reap sustained profits, he said.