Swiss food giant Nestle and French rival Danone announced that they will lower baby milk prices in China. The announcement comes after China released an investigation into possible price fixing by foreign infant milk manufacturers.
Probe on possible price cut
Demand for foreign brands has expanded in China after milk scandals resulted in distrust of local competitors. Mothers turned away from buying Chinese milk products due to compound melanine found in milk that killed babies and made thousands sick with kidney stones.
Wyeth Nutrition, a Nestle unit, will cut prices by about 20%. Danone said it was co-operating with the investigation and was preparing a price reduction plan. Nestle also stated it would not increase prices of any new products over the next year.
To boost consumption of local baby milk products
The company Wyeth Nutrition has always been respected and willing to abide by China’s rules and regulations, and is actively cooperating with the investigation into the company.
According to estimates, foreign brands now account for around half of all baby milk sales in China.
Nestle, Danone, Mead Johnson Nutrition, and Abbott Laboratories are among the companies investigated by the China’s National Development and Reform Commission.
Analysts see this as a part of China’s plan to boost consumption of local baby milk products.