Infant formula milk powder once again raised the price of "horn", foreign brands Mead Johnson has to raise prices, and domestic brands Wandashan also joined the ranks of price increases.

At Wyeth, Abbott, etc., just after the completion of the end of the price increase, there is news that Mead Johnson will also achieve price increases by the end of March, an increase of 10% -20%. On February 28, Yang Yun, external manager of Mead Johnson, said, "No comment."

While the price of foreign brands of milk powder has risen, domestic milk powder brands have also followed suit, and Wandashan has issued a notice to increase prices by 10%. Compared with the new wave of foreign brand price inflation, many Australian milk powder companies have said that there is no price increase plan this year.

Foreign brand milk powder prices have become the focus. A former dairy brand veteran told reporters, "Foreign brands occupy nearly 60% of the market share, the right to speak in the hands of dominant brands. In addition, the economic situation in Europe and the United States market is not optimistic, foreign brands pay more attention to China and other emerging markets."

From January 1, 2012, the tariff on infant formula milk in the Mainland was lowered to 4.4%, and China’s tax rate on bale powder imported from New Zealand fell by 10% to 5.8%. This favorable result is that foreign capital increases prices year by year.

This may be the start of a new round of price increase for foreign milk powder.

At the beginning of July 2011, Wyeth formula milk powder was brand new and went on the market with an average price increase of around 10%. Another foreign brand, Abbott, also increased its price by 10%. By December, Wyeth raised the price of its high-end brand, “Qifu”, per can. From 378 yuan rose to 408 yuan. Abbott also introduced the "Jingzhi" milk powder that was claimed to be imported from Denmark. The price in Phase 1 was as high as 470 yuan per can.

At the same time, the domestic milk powder brand Wandashan also announced a 10% price increase. Different from the pursuit of profit-elevation in foreign price hikes, domestically-produced milk powder companies at the low end are trying to ease the cost pressure by raising prices.

A scanned copy of the internal document “Notice on Adjusting the Price System of the Company” of a milk powder marketing company of Wandashan Dairy Co., Ltd. was circulated on the Internet. The document stated that the company’s operating costs were affected by both the increase in raw materials and the increase in domestic production and processing costs. With continuous increase, the high quality of Wandashan products is not reflected in the market price. For this reason, the company decided to make a modest adjustment to the price system of milk powder and rice flour products."

The document issued on February 17 stated that "the company is scheduled to implement the latest ex-factory prices from 00:00 on February 21, 2012." "Before March 21st, 2012, it is required to complete the distribution of distributors and terminals. The adjustment of the supply price and retail price of the store." The authenticity of this document was confirmed by Wandashan official.

A dairy company in Northeast China told reporters that the price increase is different from that of foreign brands. “Wandashan raises prices because the cost is too high. Their product prices are less than 100 yuan. The price is not comparable with foreign capital. Now raise the price to ease. pressure". The person said that "the company does not have a price increase plan."

At present, New Riz, Cradle, Ausnutria and other brands accept the newspaper's interview that they all have "no price increase plan."

In the past, the price increase of foreign brands will always be based on raw material costs and rising labor costs. However, at present, there has been a drop in prices for raw milk powder.

Global Dairy Products Trading Network showed that on February 15 the average price of Fonterra Whole Milk Powder was 3,421 U.S. dollars per ton, an average decrease of 3 percent; and the average price of powdered milk delivered in April was 3,386 U.S. dollars per ton, which was lower than the previous transaction. 2.9%.

In addition to the drop in the price of raw materials, the tariffs on domestic imported milk powder were also lowered from January 1 this year. According to the relevant provisions of the China-Singapore Free Trade Agreement, tariffs on milk powder imported into New Zealand in 2012 continued to fall, from 6.7% in 2011 to 5.8%, which will undoubtedly further reduce the cost of raw milk powder.

For imported formula milk powder, starting from January 1 this year, China will implement a lower tentative tariff rate for imports, with an average tax rate of 4.4%, which is more than 50% lower than the MFN tariff rate. Under this tax rate, formula formula infant formula can reduce the tax burden by 15%.

Foreign brand milk prices rise again, which in turn highlights the monopoly of the foreign brand milk powder market.

The above-mentioned foreign-owned brand dairy executives told reporters that foreign brands such as Mead Johnson, Dumex, Wyeth, etc. have a domestic market share of more than 55%, which is close to 60%. They have the right to speak in the milk powder industry and their pricing power is in their hands.

Compared with domestic brands, the gross margin of foreign brands is surprisingly high. Mead Johnson released 2011 financial report data show that the company's sales increased by 17% to 3.677 billion US dollars, gross margin has indeed declined slightly since 2009, year by year, from 65.5%, 63.4% to 63%, basically remained stable.

The former foreign-owned dairy brand executive said that domestic consumers of the melamine incident did not trust domestically-produced milk powder, followed by several security incidents. Domestic consumers trust foreign brands and choose the most expensive ones. “What we understand is that nobody buys powdered milk with low prices, but buys more people with higher prices.”

Another person who is responsible for sales of foreign brands told reporters that there is another important reason for the increase in the price of foreign milk powder. It is due to the high operating costs of foreign milk powder brands and the relatively large investment in advertising. The annual investment is several hundred million yuan.

The more expensive the milk powder is, the more foreign brands even have different opinions. "High prices do not necessarily mean high quality." Mead Johnson president and chief executive Golsby once told the media that there are companies on the market who use the idea that consumers in the society feel that high prices are equal to high quality to gain profits.

Behind the frequent price increase of foreign brands is the net profit from its parent company. The above-mentioned foreign-owned dairy brand executives said that Abbott’s and Wyeth’s parent company is a large pharmaceutical company. The profits of pharmaceutical companies are extremely high, and subordinate milk powder companies are also required to pay a high net profit. The net profit that Wyeth and Abbott now turn in is 20%. 25%, previously required to pay 30% of net profit. As a food company, Danone and Nestlé demanded a net profit of 12%-15%. The demand was lower.

In the domestic market, high profits have led to foreign brands such as Dumex, Mead Johnson, Wyeth, and others that have sales of more than 5 billion yuan and net profits of more than 1 billion yuan, while domestic brands have only beinmei (24.69, -0.21, -0.84%). ) Overall sales reached 5 billion yuan.

Former foreign-owned brand dairy executives said that sales of Mead Johnson and Dumex in 2011 were between RMB 5.7 billion and RMB 5.8 billion, and Wyeth was slightly lower than the two.

A person in charge of corporate marketing for Abbott, Wyeth and other companies told reporters. Big brands have strong bargaining power because they have global brand advantages.