China’s Leading Baby Formula Maker Cut Prices on Sweeping Probes

July 4, 2013 Leave a comment

China’s Leading Baby Formula Maker Cut Prices on Sweeping Probes

07-03 11:09 Caijing

The investigation, however, targets more than the six, said a person familiar with the case, adding that dozens of brands could be involved.

Beingmate, a leading Chinese baby formula brand is trimming its products prices on the heel of a sweeping anti-trust investigation targeting both foreign and home brands, in what is believed to be the second shake-up in China’s milk industry following the food scandal in 2008.Bingmate announced Tuesday night that it is planning to cut prices of some of its baby formula products, explaining the move is to actively cooperate with investigations by the Nationa Development and Reform Commission (NDRC).

The China’s top planner has launched an anti-trust probe into six baby formula brands including Mead Johnson, Wyeth, Dumex, Abbott Labs, Frisco as well as home brand Biostime, which allegedly sell baby formulas at higher prices in the country, Chinese media reported Tuesday.

Those companies together could face a fine of at least 190million yuan and up to 1.9 billion yuan, said analyst with Distribution Productivity Promotion China Commerce, Song Liang.

The investigation, however, targets more than the six, said a person familiar with the case, adding that dozens of brands could be involved.

Beingmate jumped to be the largest domestic baby formula maker in terms of sales after it was found melamine-free in a 2008 scandal which led to collapses in confidence in the country’s milk industry and rises of foreign brands.

Beingmate was also the only home brand ranked among the top five in China baby formula market in 2012 which was dominated by foreign brands led by Mead Johnson with a 12.3% share.

Chinese baby formula makers, including Beingmate, Yili and Biostime, which is under NDRC investigation, captured a less-than-30% share last year.

Biostime, the country’s 7th largest baby formula brand by sales, with a 5.7 percent market share, has plunged as much as 16% since it informed investors of the NDRC investigation last Thursday.

Beingmate shares opened higher Wednesday, rising over 5% in the morning trading.

Filed under Macro Trends

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