Nov. 9 (Bloomberg) -- China may ban sales promotions and advertising for milk formula designed for babies younger than six months in an effort to encourage breastfeeding, the Ministry of Health said.
The government is canvassing public opinion on a draft plan, the ministry said in a statement on its website yesterday. The United Nations Children’s Fund said it supported measures to curb the use of infant formula, whose sales in China more than doubled in four years.
“There is a hyper-aggressive push to get the emerging market hooked on infant formula,” said Dale Rutstein, Unicef’s chief of communications in China. “Our biggest concern is that the advertising of breast-milk substitutes is very aggressive.”
Sales of milk powder formulated for babies younger than six months reached 14.4 billion yuan ($2.3 billion) last year, from 5.68 billion yuan in 2006, according to Euromonitor International Plc. Mead Johnson Nutrition Co.’s Enfamil is the market leader, with a 9.6 percent share, according to the most-recent statistics from the London-based researcher. Danone’s Dumex has 8.9 percent and Inner Mongolia Yili Industrial Group’s Yili has 8.8 percent.
Mead Johnson fell 4.3 percent to $69.23 at the close in New York. The company is expanding city-by-city in China, which will be its biggest market this year, Chief Executive Officer Stephen Golsby said on an Oct. 27 conference call.
No one was immediately available to comment when calls were made to Mead Johnson Nutrition’s Hong Kong office line and Danone’s Consumer Hotline in Hong Kong.
While 41 percent of newborns begin life on breast milk in China, the number drops to 28 percent over the next six months. The rate is lower than the 36 percent average in developing countries, according to Unicef, which looked at data from 2005 to 2009.
A lack of exclusive breastfeeding during the first six months of life contributes to more than a million avoidable child deaths globally each year, the World Health Organization, which recommends exclusive breastfeeding for infants, said in July.
If introduced, the policy would probably dent sales for companies producing formula for newborns, said Titus Wu, a Hong Kong-based analyst with DBS Vickers.
“It’s very simple, the more you sell Stage-1 infant formula, the more you might be affected,” he said.
Companies usually offer a range of infant formula products and the ban would not prevent them from advertising their brand and other baby nutrition products, so the effect is hard to predict, said Raymond Leung, a Hong Kong-based analyst with Citic Securities, who rates Yashili International Holdings, a Hong Kong-based dairy products maker, “overweight.” Yashili controls about 5.7 percent of the market for formula for newborns up to six-months-old, according to Euromonitor.
Infant formula makers advertise “very seductive” claims about breast-milk substitutes, Unicef’s Rutstein said. Some even imply that children fed the powder will become geniuses or violin maestros, he said.
“More and more mothers are being duped that infant formula is better than breast milk, which can never be the case,” Rutstein said.
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