Chinese consumers go premium after melamine scare - TNS

By Neil Merrett

- Last updated on GMT

Related tags Milk China

The global furore over the recent melamine contamination scandal in China appears to have driven consumers in that country increasingly towards premium and international brands, according to research group TNS Worldpanel.

The contamination scandal was related to the presence of the industrial chemical melamine in milk products, linked to the hospitalisation of thousands of Chinese children this year.

Melamine is a chemical that can make it appear there is more protein in a product, and has been linked to causing kidney stones and other health problems.

Larger players set to recover

TNS said that by surveying 1,600 Chinese consumers, it found many buyers were more confident that larger players like​Arla Mengniu and Yili, which were both implicated in the scandal, would recover from the incident than their smaller counterparts.

At the peak of the scandal, the report suggests that over the space of one week, consumer dairy sales plummeted by 54 per cent compared to the same period the previous year. However, taking into account the fours weeks ending 3 October, purchases fell only by 18 per cent, according to TNS.

Belying these falls, some multinational dairy producers were found to be on the receiving end of an unexpected sales surge, which TNS says boosted their marketing share in China’s dairy market. The country is widely seen as an important strategic area for expansion.

The share improvements occurred even with a hike in dairy prices and infant milk by about 26 per cent and 33 per cent respectively.

Ethics

Meanwhile food safety experts, at a meeting held in China in September, said that the country must build a climate of responsibility among its food producers to protect consumers around the world from unsafe products.

Last month Weiming Jiang, president of DSM China, said that companies need to follow ‘basic business ethics’.

“Social responsibility is important. It’s a hearts and minds issue, not only a regulation issue,”​ explained Jiang, adding that companies in China need to learn about transparency.

He said that DSM has developed a system of reporting for its suppliers. “On top of reporting income, companies should also report their responsibility. We get our suppliers to sign a contract with us to report on how they monitor food safety.”

Robert Madelin, director general of the European Commission’s DG Sanco, also pointed to the weakness in China’s reporting system. “The law must be strengthened, as we learned in Europe, to put positive obligations on operators to check safety, a strong obligation to record…and a legal obligation that economic operators tell food safety officials. You check, record and tell.”

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