A2 Milk's China Sales Approved

Shares in infant formula suppliers A2 Milk and Wattle Health Australia have climbed after both companies strengthened their regulatory position in the lucrative Chinese market.

A2 Milk announced yesterday that its application to continue selling infant formula products in China has been approved by health regulator the China Food and Drug Administration.

Formula manufacturer Synlait Milk, which has been in partnership with A2 Milk since 2010, submitted the mandatory application in May.

A2 Milk’s registration process included tests on raw materials and finished products, certification of manufacturing standards, formulation assessment and packaging changes, chief executive Geoffrey Babidge said.

The company’s infant formula strategy in both Chinese-labelled products and English-labelled products had positioned A2 Milk well in the context of that nation’s regulatory requirements, he said, “We look forward to the continued expansion of our business in China following this announcement”, Mr Babidge said.

Under rules previously announced by Chinese regulators, all infant formula manufacturers must register brands recipes with the authority for products to be imported into China from next January 1.

Also, foreign manufacturers of infant formula products in China must register the canning facility used to blend and pack the products with the Certification and Accreditation Administration of People’s Republic of China.

From January 1, all infant formula to be sold in China must be manufactured by a facility accredited by that agency, and each facility can only register up to three brands.

Meanwhile, Wattle Health has completed its previously announced $5 million purchase of a 5 per cent stake in Australian infant formula maker Blend & Pack, which is licensed to produce infant formula for China’s market.

Wattle Health said the deal ensured its formula range would be the first brand nominated by Blend & Pack for Chinese Food and Drug Administration approval.

Shares in A2 Milk, which is based in New Zealand but listed on the ASX, closed flat yesterday at $5.99. Synlait Milk gained 39 cent to close at $NZ6.25.

Wattle Health gained half a cent to close at 82.5 cents.

As seen in Daily Telegraph, September 29th 2017.