US company ups powdered milk operations in Asia

Mead Johnson, the dairy product subsidiary of Bristol-Myers Squibb, has started production at its first powdered milk plant in Thailand that will serve as a base to increase the company's business in Southeast Asia, the Bangkok Post reports.

According to the report, the US company is hoping that the US$10million (€11.4m) plant will help it increase its market share in the increasingly competitive powdered milk market in Thailand.

Local production will substitute some products that have previously been imported from factories in the US, Australia and New Zealand for distribution in Thailand.

The plant's output is expected to be exported to neighbouring countries, such as Vietnam, Singapore and Malaysia, starting from the middle of this year. Mead Johnson plans to produce other lines of dairy products including infant powdered milk and UHT products.

Anakkawat Kowathanakul, local marketing director of Mead Johnson's nutritional division, said Thailand was chosen as the production base for Southeast Asia because it was a convenient transport centre and had a milk market that was quite large when compared with other countries.

"To have our own factory here would help increase our management efficiency in terms of launching new products, transport and the development of new flavours to match consumer demand,"​ said Anakkawat.

Although the import tax on finished products had been cut, the cost of the company's products is largely unaffected because raw milk still has to be imported from New Zealand.

The Chon Buri plant is the third Mead Johnson powdered milk plant in Asia, with the two others in China and the Philippines. All of the capacity from the Chinese factory serves the domestic market while some milk from the Philippine operation is exported to Indonesia and Malaysia.

Anakkawat said that due to the economic downturn, the Thai powdered milk market for children aged above one year grew by just 2-3 per cent in value last year.

"The market for powdered milk will grow again within two years of the economic recovery. At the moment we can't see clearly when the economy will recover, but the market for infant powdered milk has improved, contracting only 8 per cent last year compared with a 10 per cent fall in the previous years,''​ he said.

Currently, Nestle (Thailand) has a 30 per cent stake in the one-billion-baht a year local powdered milk market, followed by Mead Johnson and Dumex, with 20 per cent each. Mead Johnson has a 5-6 per cent share of the total UHT milk market, worth an estimated six billion baht a year. Yesterday it introduced the new Alacta-NF Calsibank formula for children aged one to six years. The new products are expected to help boost Mead Johnson's share of the powdered milk market by 2-3 per cent this year.