Murray Goulburn and Blackmores are struggling to break into the $600 million local infant formula market, as personal shoppers sending Australian products to China shun their new ranges.
The latest figures from Aztec Data, obtained by The Australian Financial Review, show each company has secured less than 0.1 per cent of the market, compounding the woes of Murray Goulburn which has seen its listed units tumble after cutting milk prices and its profit outlook.
The struggling dairy company sold just 46 units of its NatraStart infant formula in chemists and supermarkets for the week ended May 8, according to Aztec.
This is consistent with the brand’s performance over recent months and compares to total weekly sales in the category of 419,000.
Sales for Blackmores infant formula, launched in late January and more recently in supermarkets, were equally poor at 570 units for the period, in line with its recent performance.
Australia retail sales data is indicative of Chinese demand for infant formula, as it is estimated more than half of all purchases made in Australia are sent via courier to China by personal shoppers known as Daigou.
This courier market could be worth as much as $350 million annually to Australian retailers, according to calculations made by the Financial Review using industry data.
The poor performance of Murray Goulburn’s NatraStart brand suggests the struggling dairy company may have to cut the value of infant formula inventory and investments made in the brand.
‘Daigou’ not buying
For Blackmores, it shows Chinese consumers still see the company as a vitamins brand and are yet to embrace its new offering.
“We’ve have had no client enquiries about Blackmores infant formula,” said one Daigou via instant message, who goes by the name Kangaroo Baby.
Another Daigou who uses the online name, Shao Bei, said she would not choose the Blackmores infant formula. “This brand does not specialise in infant formula. It is not their strength,” she said.
“There are also plenty of other choices.”
She said among Chinese consumers New Zealand’s Karicare was the most popular, followed by a2 Platinum and Aptamil, then Swiss product Wyeth and Bellamy’s Organic.
A search of Aliababa’s Taobao marketplace shows just five stores or one page of search results for Murray Goulburn’s NatraStart.
Murray Goulburn had not provided comment at the time of publication.
Blackmores infant formula pulled up 12 pages of search results, compared to the more than 100 pages of results for a2 Platinum and Bellamy’s Organic.
Blackmores chief executive Christine Holgate did not address the issue of sales data directly when asked by the Financial Review.
“Blackmores is pleased with the warm response we’ve had from mums since launching our infant nutrition range and we are continuing to roll out distribution,” she said.
Previously, Ms Holgate said the brand was “well positioned” for the launch into supermarkets and the commencement of marketing campaigns in March.
The Blackmores-branded infant formula is a joint venture with the listed Bega Cheese.
Figures from Aztec Data show Blackmores had average weekly supermarket sales in the month to May 8 of 237 units, compared to about 300,000 for the category.
Over the same period Murray Goulburn averaged weekly sale of 24 units in supermarkets.
This is despite infant formula sales in Australia tipped to grow by 30 per cent this year to about $600 million.
Despite the tepid early sales of Blackmores infant formula, Chinese demand has in the past changed quickly for the company.
In 2014 a chance endorsement from Chinese actress Fan Bingbing saw sales of its vitamin E cream jump from 3000 tubes a month to 130,000 almost overnight. The company sells about 600,000 tubes each month.
But Mark Tanner, the chief executive of market research firm China Skinny, said a brand must be successful in its home market before Chinese consumers will adopt it.
“These China only brands rarely do well,” he said via phone from Shanghai.
“Infant formula also has the highest brand loyalty among any category in China.”
Mr Tanner said the Daigou won’t push a product to their customers until they see it is popular in Australia.
The impact Daigou can have on a brand’s success is borne out in Australian population statistics.
While the Australian birth rate has been relatively flat at about 310,000 annually over the past five years, infant formula sales are set to triple over the period.
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