December 6, 2006
Meiji introduces fresh milk in China
Japan's Meiji, also considered Asia's biggest dairy, has now been exporting pasteurised milk directly to Shanghai from Japan, becoming the first foreign dairy to supply fresh milk to the rapidly growing market.
The move underscores the rising competition among foreign players for a share of China's dairy market.
The dairy's ultrapasteurised ESL milk has a shelf-life of 15 days, allowing for five days spent in transport and customs and a further 10 days on sale in Shanghai supermarkets. However, with the milk priced at RMB38 (US$4.8) per litre, the company has restricted its sales to a tiny niche of consumers.
Most Chinese milk costs a sixth of this price, with high-end Chinese milk, such as Mengniu's Telunsu brand or Yili's Jindian brand, still less than half the cost of Meiji's.
The compay plans to cater to Japanese-owned supermarkets in Shanghai, according to Jin Xuhua, marketing manager from Meiji (Shanghai).
The product would be tested in Shanghai over the next year, with yoghurt and other dairy products adding to the range. During this time the company would also try to work out a reasonable price.
The milk costs two to three times more than in Japan. Nevertheless, the firm expects sales to reach JPY100 million (US$0.87 million) by the end of next year.
Demand for dairy products in China has more than doubled in the past five years. In spite of a growing domestic milk production, China has been able to produce 24 million tonnes a year (liquid milk equivalents) of dairy products per year, according to Rabobank.
Despite a limited market for the milk due to its high price and its being confined to the coastal area for logistic reasons, the move could trigger fierce competition, felt Wang Dingmian, deputy chairman of Guangdong Dairy Industry Association.
It might also encourage Chinese companies to pay more attention to new processing techniques and higher quality, trends that would eventually influence their survival in the market, he said.
