Japan’s Meiji to Stop Baby Formula Sales in China on Competition

Meiji Co., the Japanese confectioner and dairy products maker, said it will stop selling baby formula in China due to rising material costs and intensified competition in the world’s most populous nation.

“There are so many players in the market,” Junji Ohashi, a spokesman for parent Meiji Holdings Co. (2269), said by phone yesterday. “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. (MJN), 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 by phone.

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

Meiji Holdings’ sales rose 1.6 percent to 1.13 trillion yen ($11.6 billion) for the year ended March. Net income more than doubled to 16.6 billion yen.

Mead Johnson ranked first in China’s milk-formula market with a 14 percent share last year and Hangzhou Beingmate Group was No. 2 with 10 percent, Euromonitor said. Danone was third with a 9.2 percent market share.

To contact the reporter on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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