July 27, 2015

Falling sales: Danone retires Dumex brand products in China



French yogurt and infant formula maker Danone SA said it is giving up on its Dumex brand products in China because of a downtrend in sales partly caused by a shift in consumer preferences.


It said it has reached a preliminary agreement to merge Dumex in China with infant formula maker Yashili and increase its shareholding in dairy firm Mengniu. "By bringing the Dumex and Yashili brands closer together, this operation would build a strong local infant milk formula brand platform", it said.


"In China, we are strengthening our Early Life Nutrition business model, building on the success of our international brands and reinforcing our partnership with Mengniu and Yashili", said Danone CEO Emmanuel Faber.


Danone said that although its Early Life Nutrition division reported an 11% hike like for like during the second quarter (including a 7.3% rise in volume and a 3.8% rise in value) and despite a "boom in online sales combined with the popularity of our Aptamil and Nutrilon brands", Dumex-brand products remained well below levels observed in early 2013", adding long-term sales projections for Dumex were pointing toward a downward direction. (Like-for-like figures compare sales or financial results in one period with those for the previous period, taking into account the same number of stores, businesses and activities with no new ones added.)


Danone said the comparatively low sales of Dumex baby milk in China were caused by the "false alert raised by Fonterra and by the shift in consumer preferences from supermarkets to both online sales and specialized distribution".


Earlier this year Fonterra, the world's largest exporter of dairy products and New Zealand's biggest company, figured in the news when it divulged that an unidentified blackmailer threatened to contaminate its infant formula products with the pesticide 1080, which is used to kill rats and possums.


However, samples of infant formula turned in by consumers for forensic analysis were all found negative for 1080.

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