Intl postal services make hay from baby formula shipments

Dairy products at a supermarket in Xuchang, Henan province. Geng Guoqing / For China Daily

As Chinese consumers fret about whether locally produced infant formula is safe, the Dutch postal service has a burgeoning new line of business: exporting milk powder to China.

Dried milk has become one of the main items customers send to China via PostNL NV, helping drive a 13 percent increase in the fourth-quarter parcel shipments, The Hague, Netherlands-based mail delivery company said Feb 23.

Danone makes infant formula under the Nutrilon brand in that country, while Mead Johnson Nutrition Co has been increasing Dutch production to help supply China, which consumed one-third of the industry's $62 billion in global sales last year.

PostNL's success is emblematic of a worldwide boom in the flow of baby food to China in quantities that range from single cans sold via Amazon.com Inc to 25 metric-ton orders through suppliers on Alibaba.com.

Since a 2008 infant formula scandal, the Chinese have sought out foreign-made brands. That is accelerating now with the development of online marketplace sites such as Alibaba Group Holding Ltd's Tmall.com and Taobao. Bpost SA, the Belgian postal service, has also reported growth in milk powder shipments.

"There are so many safety issues about milk powder and my baby needs it everyday," said Vina Chen, a 31-year-old mother of a 15-month old girl in Nanjing. She orders online, through a shopping agent, or has it sent by an aunt in Sydney, preferring Bellamy's Organic from Australia because it is less well-known, limiting the risk of receiving fakes. "We are extremely cautious."

Just as many consumers in emerging markets skipped fixed lines and leapfrogged to mobile phones, e-commerce may play a bigger role in countries that don't have very developed retail industries, Nestle SA Chief Executive Officer Paul Bulcke said at a Feb 19 news conference in Vevey, Switzerland. The owner of the Gerber brand aims to work with big e-commerce sites to boost sales.

China consumes about $19 billion of baby food annually, making it the biggest market for such products after sales more than doubled in five years, according to Euromonitor. About 30 percent of baby formula consumed there is ordered via the Internet, following a "very, very quick shift" in purchasing patterns, according to Danone CEO Emmanuel Faber.