The shock news that Wyeth plans to close its Co Limerick plant is a huge blow to the region.
However, it is trends on the other side of the world which have caused the closure, rather than any problems with the facility.
In its press statement announcing the closure and potential loss of 542 jobs, the company cited the twin problems it faced in the key Chinese infant formula market.
Plunging birthrate
The first of those is the plunging birthrate in the country. That figure dropped from 13.57 per 1,000 population in 2016 to 6.77 per 1,000 in 2022, according to official Chinese statistics.
This means the birthrate has been cut in half in only six years.
For exporters servicing the Chinese infant formula market, this would be bad enough news, if it wasn’t for the other problem – indigenous Chinese infant formula has shrugged off much of its terrible reputation.
Back in 2008, the melamine scandal effectively ended Chinese faith in locally produced dairy products and opened a market for global producers to exploit.
Concerted efforts
Concerted government efforts have, in recent years, streamlined China’s domestic infant formula production and the introduction of increasingly stringent standards have acted for foreign producers as a barrier for entry to the market.
Earlier this year, new rules were imposed, forcing producers to re-register their products for the Chinese market. The change forced some companies, such as US-based Abbott Laboratories, to abandon the market altogether.
Nestlé, owner of Wyeth, said at the time that it welcomed the new standards.
China is also increasing its domestic dairy herd, with a five-year plan announced in 2022 to improve the dairy sector.
![](https://www.farmersjournal.ie/WEBFILES/000/788/760/2074000-788760.jpg)
The Nestlé research and development, plant in Askeaton, Limerick, opened in 2019. / Seán Curtin, Fusionshooters
Taken together, all these points mean only one thing – the market for imported infant formula in China has been rapidly evaporating.
Ireland may not have noticed how quickly this has been happening, as last year saw a huge crunch in production in the US, which Irish plants were able to take advantage of.
That market opportunity was only temporary, with production back on track in North America now and the market uninterested in Irish product.
All is not lost
All is not lost for the Irish infant formula exports, as, according to Bord Bia, markets in Indonesia, Thailand and the Philippines are growing. There will be plenty of competition there too, as global exporters fight for market share.
One of the biggest suppliers to the Asian market is New Zealand and it has felt the brunt of the infant-formula slowdown, with exports of the product dropping from 117,442 tonnes in 2019 to 87,753t last year.
Irish dairy processors are also trying to pivot their product offering in China, with several starting to offer formulas aimed at the adult and elderly market.
The country’s ambassador to Ireland recently said that China’s elderly population is an opportunity for the Irish dairy sector.
Overall, the days of easy money from selling infant formula to China have been over for some time.
Companies have reacted to this in one of three ways: abandon the Chinese market; try to pivot their offering to meet changing demands; or, as it seems was the case with Wyeth, keep going until there is no alternative but to end production.
Read more
Nestlé to close infant formula plant in Limerick
The shock news that Wyeth plans to close its Co Limerick plant is a huge blow to the region.
However, it is trends on the other side of the world which have caused the closure, rather than any problems with the facility.
In its press statement announcing the closure and potential loss of 542 jobs, the company cited the twin problems it faced in the key Chinese infant formula market.
Plunging birthrate
The first of those is the plunging birthrate in the country. That figure dropped from 13.57 per 1,000 population in 2016 to 6.77 per 1,000 in 2022, according to official Chinese statistics.
This means the birthrate has been cut in half in only six years.
For exporters servicing the Chinese infant formula market, this would be bad enough news, if it wasn’t for the other problem – indigenous Chinese infant formula has shrugged off much of its terrible reputation.
Back in 2008, the melamine scandal effectively ended Chinese faith in locally produced dairy products and opened a market for global producers to exploit.
Concerted efforts
Concerted government efforts have, in recent years, streamlined China’s domestic infant formula production and the introduction of increasingly stringent standards have acted for foreign producers as a barrier for entry to the market.
Earlier this year, new rules were imposed, forcing producers to re-register their products for the Chinese market. The change forced some companies, such as US-based Abbott Laboratories, to abandon the market altogether.
Nestlé, owner of Wyeth, said at the time that it welcomed the new standards.
China is also increasing its domestic dairy herd, with a five-year plan announced in 2022 to improve the dairy sector.
![](https://www.farmersjournal.ie/WEBFILES/000/788/760/2074000-788760.jpg)
The Nestlé research and development, plant in Askeaton, Limerick, opened in 2019. / Seán Curtin, Fusionshooters
Taken together, all these points mean only one thing – the market for imported infant formula in China has been rapidly evaporating.
Ireland may not have noticed how quickly this has been happening, as last year saw a huge crunch in production in the US, which Irish plants were able to take advantage of.
That market opportunity was only temporary, with production back on track in North America now and the market uninterested in Irish product.
All is not lost
All is not lost for the Irish infant formula exports, as, according to Bord Bia, markets in Indonesia, Thailand and the Philippines are growing. There will be plenty of competition there too, as global exporters fight for market share.
One of the biggest suppliers to the Asian market is New Zealand and it has felt the brunt of the infant-formula slowdown, with exports of the product dropping from 117,442 tonnes in 2019 to 87,753t last year.
Irish dairy processors are also trying to pivot their product offering in China, with several starting to offer formulas aimed at the adult and elderly market.
The country’s ambassador to Ireland recently said that China’s elderly population is an opportunity for the Irish dairy sector.
Overall, the days of easy money from selling infant formula to China have been over for some time.
Companies have reacted to this in one of three ways: abandon the Chinese market; try to pivot their offering to meet changing demands; or, as it seems was the case with Wyeth, keep going until there is no alternative but to end production.
Read more
Nestlé to close infant formula plant in Limerick
SHARING OPTIONS: