MILKY
PARTNERSHIP
The partnership between a2 Milk Company
and the Yuhan Corporation comes at a perfect
time to capitalise on the infant formula market
in South Korea, as consumers are showing an
increasing openness to switching brands.
The New Zealand-based
T E S T I N G
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company has entered into
an exclusive sales and
distribution agreement
with Yuhan – which posts
an annual revenue of $1.4 billion and
is mostly known as a pharmaceutical
specialist - to promote and distribute
branded fresh milk and infant formula
products in South Korea. Traditionally,
South Korean consumers have been
loyal to goods and products produced
locally, “sometimes seemingly
blindly so,” says GlobalData consumer
analyst Fiona Dyer. “In South Korea,
multinationals have struggled to make
headway in the infant formula category.
Parents in the country appear to be
more than satisfied by the offerings
of the country’s top two suppliers
– Namyang and Maeil,” she says.
“However, similar to China, South
Korea has been subject to a number of
formula adulteration scandals, with the
market said to be particularly susceptible
to negative publicity. For the top
two manufacturers alone there have
been a number of incidents between
2009 and 2013.” Sales of baby milks
in South Korea have been declining for
several years, primarily as a result of
falling birth rates. GlobalData figures
show a 6.1% fall in volume sales between
2010 and 2016, and forecasts
are for this generally depressing trend
to continue. “South Korean consumers
have increasingly demonstrated that
they are becoming keen on a bargain,
so the time appears ripe for a2MC to
cash in. It seems that a2MC believes
that the lack of direct competition may
make Yuhan more prepared to stick
to the new agreement. a2MC has
demonstrated that it has near-impeccable
timing as far as the introduction
of its infant formulae and milks are
concerned,” Dyer says. They will
be hoping to continue this success
in the South Korean infant formula
space.” The a2MC product range will
be sourced from Australia and New
Zealand, with nutritional products
produced by the company’s key supply
partner Synlait Milk. Initial sales are
expected to commence during the
remainder of this year.
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