Meiji to halt formula sales in China

Bloomberg

Meiji Co. said it will stop selling baby formula in China due to rising material costs and intensified competition.

“There are so many players in the market,” Junji Ohashi, a spokesman for parent Meiji Holdings Co., said Thursday. “Our sales fell to one-third of the peak in 2009.”

China’s baby food market is dominated by Western and local brands such as Mead Johnson Nutrition Co., Hangzhou Beingmate Group Co. and Danone. Meiji didn’t rank in the top 10 milk formula brands in the country last year, according to a Euromonitor International analysis of market share in the country.

China in August fined six dairy companies, including Mead Johnson and Danone, a combined 670 million yuan ($110 million) for price-fixing, a record penalty for violating anti-monopoly laws. While Meiji was also probed, the company wasn’t fined because it cooperated with the investigation, it said in August.

The decision to suspend infant-formula sales isn’t related to the probe, Ohashi said. The company doesn’t disclose sales in China and it only accounts for a small percentage of total sales, Meiji Holdings spokeswoman Sayo Chiba said.

The company will suspend sales as soon as the inventory clears, said another spokesman, Masanobu Nakamura. The group will continue to sell other products, including snacks and ice cream, in China, he said.

Meiji Holdings’ sales rose 1.6 percent to ¥1.13 trillion for the year that ended in March. Net income more than doubled to ¥16.6 billion.