Aspen reveals China infant formula ambitions following NZNM investment

By Mark ASTLEY contact

- Last updated on GMT

SMA, sold in Australia by Aspen under license from Nestlé, will be manufactured by NZNM as part of the deal.
SMA, sold in Australia by Aspen under license from Nestlé, will be manufactured by NZNM as part of the deal.

Related tags: Infant formula

South African pharmaceutical giant Aspen has set its sights on China after agreeing to acquire a 50% stake in infant formula manufacturer, New Zealand New Milk (NZNM).

The deal, which will be completed for an undisclosed sum, takes Aspen “another step towards”​ entering the lucrative Chinese infant formula market, the company said a Johannesburg Stock Exchange (JSE) filing.

NZNM, which until recently was contracted by the a2 Milk Company to produce a2 Platinum, is one of only a small number of New Zealand infant formula manufacturers with permission to export to China.

As of May 1 2014, under revised regulations, only infant formula manufactured by firms on the Chinese Certification and Accreditation Administration (CNCA) List of Registered Dairy Manufacturers is permitted to enter China.

“NZNM is one of a limited number of companies which holds the required endorsements from the Chinese regulatory authorities to produce infant milk formula for this key territory and the investment in NZNM represents another step towards Aspen’s aspirations to enter the Chinese infant milk formula sector, valued at approximately US$15bn,” ​said Aspen in the JSE filing.

Under the deal, Aspen infant formula brands sold in Australia will be manufactured at NZNM’s Auckland plant, which NZNM plans to expand in early 2015.

In April 2013, Aspen secured a 10-year license from Nestlé to manufacture and sell former Pfizer infant formula brands, S26, S26 Gold, and SMA, in Australia, South Africa, Botswana, Namibia, Lesotho, Swaziland, and Zambia.

Aspen's October investment came just days after Chinese real estate group Evergrande officially entered the infant formula arena.

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Evergrande launched the Cowala brand in China last month.

Looking to capitalize on high Chinese demand for imported infant formula, Evergrande acquired Cowala Dairy, a New Zealand-based manufacturer, in September 2014.

Launching its Cowala brand last month, the company said in the long term it hoped "to develop a reliable Chinese dairy brand."

Related topics: Manufacturers, Consolidation, Nutritionals

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