Dive Brief:
- Fonterra, the world's largest dairy exporter, has signed a deal to take a 20% stake in China's Beingmate and create a global distribution system to supply infant formula to China's massive market.
- The decision to take on another Chinese company as a partner comes just six years after its previous partner, Sanlu, was connected to tainted formula that killed six children.
- Fonterra is also still recovering from the damage incurred when it issued a "false alarm" recall of dairy products it sold to other infant-formula makers. France's Danone has sued Fonterra in connection with that incident.
Dive Insight:
The world's dairy industry refers to infant formula sold in China as "white gold." The insatiable appetite that China has for the stuff offers extraordinary opportunities for companies that can navigate the importing requirements and bureaucracy of that nation. Fonterra apparently sees enough potential profit in selling white gold in China that it's going to a) invest a half billion in expanding capacity, b) risk doing business with a foreign partner in country where it has been burned badly before and where infant formula has a history of being tainted.