French milk producer Candia, part of the dairy cooperative Sodiaal Group, is looking to make inroads into the high-end dairy products market in China, with an eye on the nation's growing demand for imported products.
Candia formally entered the Chinese market on Tuesday in Hangzhou, Zhejiang province, by teaming up with Zhejiang Native Produce and Animal By-products I/E Group.
"There are many competitors in the Chinese market. Unlike other foreign brands that are already in this market, we are not planning to enter the market with all of our products," said Giampaolo Schiratti, chief executive officer of Candia.
He said that the company is not looking to be the fastest-growing or the largest overseas player in the Chinese market. Among its more than 60 products, Candia will focus on promoting products like infant formula liquid milk, diet milk, and high-calcium milk for the elderly people.
Schiratti said that its infant formula milk has been specially designed to suit Chinese babies and all the products are produced and packed in France. "Apart from the minor adjustments in infant formula milk, we want to provide the same guarantee for our products in China as we do in France," he said.
Candia is the largest dairy products producer in France and controls 65 percent of the domestic market share. The company is capable of producing 1.4 billion liters of milk every year.
Bi Wenjie, general manager of the Zhejiang firm, said Candia will not try to grab market share by lowering its prices, even though prices of dairy products have been dropping in recent years.
In April, the European Union lifted the quotas on milk products, causing the global milk prices to fall by up to 4 percent. "Candia does not believe in price wars as it will lower the brand value and hurt the healthy growth of the market," Bi said.
The price of a single pack of 1-liter fresh milk produced by the company is at least 50 percent higher than other foreign brands in China.
Bi said that Candia will focus on a membership sales strategy by opening stores for customers to experience its dairy culture and combine offline and online shopping experiences.
"We plan to open 10 stores every year to cover first- and second-tier cities," he said. "We can see the potential in the market."
In 2014, China imported 1.93 million metric tons of dairy products, accounting for one-third of the domestic output, according to the Ministry of Agriculture.
Bian Zhenhu, director of the China Chamber of Commerce of Foodstuffs and Native Produce, said: "There is still huge space for companies in this market. Dairy consumption per capita in China is less than one-third of the world average," he said.
Bian said that the entry of Candia will restructure the the country's dairy industry. "There are far too many dairy producers who are competing with each other in the low-price segment. But a healthy market should have both low- and high-end players," he said.
