Sutton Group and Gardians, the dairy manufacturers to be acquired by Danone's Nutricia arm, are among infant formula companies to gain registration to export to China under that nation's new food safety regulations.
Nutricia itself gained registration, as did Fonterra Cooperative Group, GMP Pharmaceuticals and Dairy Goat Cooperative (NZ). They represent about 90 percent of New Zealand's infant formula exports to China by volume.
Other companies can be registered after the May 1 deadline although owners of infant formula brands who can't demonstrate a close relationship with a manufacturer may struggle to meet Chinese requirements, Food Safety Minister Nikki Kaye said today.
No price has been disclosed for Nutricia's purchase of Sutton Group, an Auckland-based blending, packing and can-forming company and Gardians, which operates a spray dryer in Balclutha and 18 dairy farms that supply milk and is jointly owned by the Sutton and Patterson families.
China telegraphed its new requirements to the government last week by releasing an audit of a sample of New Zealand manufacturers conducted in March, leaving officials and companies scrambling to interpret the changes in time for today's registration deadline.
According to financial statements lodged with the New Zealand Companies Office Nutricia's local arm recorded $373 million worth of sales in 2012, and delivered a profit of $61 million back to its parent company, Nutricia International.
Infant Nutrition Council chief executive Jan Carey said the manufacturers and brands already registered account for approximately 90% of all New Zealand infant formula exports by volume.
“Today’s announcement confirms that New Zealand manufacturers are able to meet the high test set by the Chinese government. While some New Zealand producers have yet to be registered, we are confident all manufacturers will meet the new standards in due course.”
Ms Carey said while the overall volume of infant formula exports is unlikely to change, there are likely to be fewer brands sold.
“The Chinese have made it clear they want to reduce the number of brands being offered to consumers and the move to tighten regulations was expected.”
Ms Carey said that it is likely to have an impact on companies or ‘brand owners’ selling formula produced on their behalf.
“In short, the regulations require those selling infant formula to have close links to the manufacturer and in the long run, our industry will benefit from the increased confidence of Chinese consumers.
“While today’s news is positive for manufacturers, for brand owners without a close relationship with the manufacturer the bar is going to be set high, and some will struggle to meet the new rules,”