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Fonterra to Lower Prices for Supplements in China Amid Probe

July 19, 2013

World’s biggest dairy exporter will offer the supplements for 9% less in China starting next month.

Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, will cut prices in China for Anmum supplements for pregnant women amid a government pricing probe of baby formula makers based outside the country.
Fonterra will offer the supplements for 9 percent less in China starting next month, the Auckland, the New Zealand-based company said in an e-mailed statement yesterday. The milk processor got about 14 percent of revenue from China in the six months ended Jan. 31, according to data compiled by Bloomberg.
The cuts are intended to keep Fonterra’s Anmum, which contains beneficial bacteria, folate and iron, competitive after rivals announced price reductions, Maree Wilson, a spokeswoman at the company said by e-mail. Abbott Laboratories, Nestle SA, Danone SA, Royal FrieslandCampina NV and Mead Johnson Nutrition Co. lowered prices after the National Development and Reform Commission, the country’s top economic planning agency, began an investigation this month into their pricing of milk powder.
China’s official People’s Daily newspaper has said the NDRC has proof companies under investigation sold products at high prices in China and their pricing increased about 30 percent since 2008, the year melamine-tainted baby formula sold by local producers killed six infants.
Fonterra gained 0.3 percent to NZ$7.42 at the close in Wellington trading. The shares have climbed 5.5 percent this year, compared with a 13 percent increase on the NZX 50 Gross Index.
Fonterra on July 4 said it had been contacted by the NDRC regarding an investigation of consumer dairy products in China. Wilson of Fonterra declined to comment on the NDRC contact.

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