Chinese firm reportedly grappling with distribution challenges
Fonterra is pinning its hopes on a tie-up with Chinese infant formula giant Beingmate as it pushes into China's lucrative baby milk market, but the dairy co-operative's new partner is facing falling sales and profits and is reportedly grappling with major distribution challenges.
Hangzhou-based Beingmate has the largest share of the Chinese formula trade of any domestic producer - about 10 per cent - and the partnership is expected to provide the New Zealand company's Anmum infant nutrition brand with access to around 80,000 retail outlets across the world's second-biggest economy.
In an interview with Bloomberg TV yesterday, Fonterra chief executive Theo Spierings said the tie-up was all about "combining strength with strength".
But the Chinese firm's recent financial performance has not featured in the public relations push. Revenue slumped 25 per cent during the first six months of this year to 2.4 billion yuan ($466 million), while profit plunged by more than 70 per cent, according to a report by China's Sina online news outlet, which was translated for the Business Herald.