Lure for a dairy giant: more babies and plenty of pizzas

Cows imported from New Zealand are unloaded from a ship in Qingdao, Shandong province. YU FANGPING / FOR CHINA DAILY

The New Zealand dairy giant Fonterra Co-operative Group Ltd, the world's largest dairy products exporter, is looking to China's new two-child policy to bolster its business in the country.

Theo Spierings, Fonterra's chief executive, said the policy will help drive its sales growth in the next few years.

"I have seen increasingly larger demand of high-quality and safe dairy products in China. We are deeply committed to make a tangible contribution to the sustainable development of the dairy industry in China."

In April Fonterra signed a memorandum of understanding with Beingmate Baby and Child Food Co Ltd, a Chinese infant food manufacturer, to strengthen their collaboration in maternal and infant nutrition by promoting and developing the Anmum brand, a sub-brand of Fonterra, in China.

Fonterra and Beingmate formed their partnership in August 2014 aiming to satisfy China's growing demand for infant formula. Last year Fonterra bought an 18.82 percent stake in Beingmate, which has started to sell Fonterra's Anmum products in China.

Song Liang, an expert on China's dairy industry, said: "Fonterra has been one of the major global raw material dairy providers, and it is not that good at specific branding, marketing and setting up sales channels. Anmum had a small market share in China before Fonterra joined forces with Beingmate."

China is the world's largest importer of milk products, and Chinese regard New Zealand dairy products as clean, green and safe.

New Zealand's dairy products account for about 40 percent of China's imported dairy market. Whole milk powder, for example, is now imported almost solely from New Zealand.

Fonterra has expanded its food service distribution in China to reach 40 cities. More than half the pizzas are topped with Fonterra cheese, and more than half the leading bakery chains use Fonterra dairy products as their ingredients. Fonterra says it plans to expand its business to more second- and third-tier cities soon.