China’s Food and Drug Administration (CFDA) has announced the first and second wave of infant nutrition companies that have been approved under its new registration process, to supply infant formula product into China from the start of 2018.

A total of 24 infant nutrition manufacturing facilities have been registered to supply 98 different baby formula products to China. Just four of this total are factories based outside of China, one of which is Wyeth’s Askeaton facility in Limerick.

The other three are Yashili’s plant in New Zealand, FrieslandCampina’s manufacturing base in the Netherlands and Mead Johnson’s infant formula plant, also located in the Netherlands, which is supplied by some dairy powder sourced from Ireland.

The 24 factories that have won approval are operated by 16 companies, just five of which are international players from outside China. These include Wyeth, Abbott, Mead Johnson, FrieslandCampina and Nestlé. Interestingly, the other major international player, Danone, has not made the initial registration lists.

However, further approval lists are expected in the weeks and months ahead, which should see the other Irish infant formula manufacturing sites approved. These include Abbott’s facility in Cootehill, Danone’s plant in Wexford and Kerry Group’s Charleville facility, which produces infant formula for the Chinese company Beingmate.

Reasons for regulations

China announced this new registration programme in October 2016, in a bid to gain greater control of the country’s infant formula market. The CFDA estimates close to 3,000 different infant formula brands are sold in China, which it says is confusing for consumers.

However, for international suppliers, the fear is that Chinese authorities are using the new process to drastically reduce the country’s dependence on imports. The CFDA has said it aims to reduce the number of infant formula brands by as much as two thirds with this new registration process.

For Ireland, the importance of the infant nutrition market is clear, with 2016 exports of infant formula increasing a massive 72% to more than €1.3bn. About €520m of these exports are destined for China, where Ireland is the number two international supplier behind the Netherlands. However, Ireland’s position in the premium category allows Irish product to command a much higher price, close to $17,000/t, compared with an average of $13,000/t for Dutch product.