Chinese Milk Powder Pricing Revolution to Come

New Zealand is known in China as a land less of hobbits as it is elsewhere and more for its unsullied environment, free from the toxic haze and overwhelming crowds that bog down China’s urban areas. That is to say it is “clean and green,” or, as ads from Tourism New Zealand proclaim, “100% Pure.” This is a reputation that often extend to the country’s exports, which in China’s case involve one particularly in-demand item: infant milk powder. Because of the 2008 Sanlu milk scandal and general food security concerns among China’s growing middle-class, foreign milk powder is highly sought-after, with skyrocketing demand eventuating in a milk powder drought in Australia after China’s November 11 Single’s Day online shopping bonanza. Because of New Zealand’s huge dairy production and limited domestic consumption, the country is the world’s largest exporter of dairy products, leading a reputation as the “Saudi Arabia of milk.” So combine that premium reputation for being 100% pure with a product heavily in demand and what is the result? Severely inflated prices. Now, perhaps those prices are a reflection of high demand in China, as high-priced foreign milk powder keeps on selling, but perhaps there is a little too much being made of the New Zealand brand. Or not, according to Theo Spierings, CEO of New Zealand dairy cooperative Fonterra. Spierings was unsurprisingly unimpressed […]