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Expert sees milk powder shortage in the Netherlands as market problem
Last Updated: 2013-05-15 20:15 | Xinhua
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A shortage of Dutch baby milk powder in supermarkets and drug stores is not a consequence of capacity problems of Dutch milk producers, but part of a smart marketing campaign, retail and marketing expert Paul Moers told Xinhua recently.

Moers pointed out that the reason why Chinese consumers buy Dutch milk powder is mainly because cans sold in the Netherlands are almost three times cheaper and, more importantly, of indisputable reputation.

According to a research conducted by Dutch newspaper De Telegraaf, Nutricia has been exporting full containers of instant milk formula to China, generating sales numbers much higher than the product would have yielded in the Netherlands. Dutch consumers and supermarkets meanwhile struggle with a shortage of Nutrilon milk powder.

Official distribution channels such as the Chinese webshop Tmall show that Nutricia is exporting milk powder to China. Chinese consumers can buy a Nutrilon can for 40 U.S. dollars per kilo, while the price in the Netherlands is 17 dollars per kilo.

A quick search for milk powder named Niulan, the popular Chinese name for Nutrilon, on Chinese webstores such as taobao.com shows more than 60,000 results. Many of the displayed products are not sold via official channels, showing that illegal networks of traders of Nutrilon products are extremely active.

"But Nutricia does not benefit from this so-called parallel trade. They are trying very hard to sell their expensive products via their official distribution channels in China," Moers said.

He added, "But even though the products are almost exactly identical, many Chinese consumers distrust almost all milk powder cans without Dutch descriptions on the packages."

The Dutch Federation for the Food Industry called Moers' statements "complete rubbish."

"There is a serious network of illegal traders trying to get as much as they can, causing a serious scarcity for Dutch consumers," organization director Philip den Ouden told Xinhua.

"In order to meet the excessive demand, the two main producers Nutricia and Friso have increased the production for the Dutch market by 50 percent in the last quarter of 2012. In the Netherlands, there were around 180,000 infants in that period and we know for sure that in theory they produced enough for them," Ouden said.

Demand in the Dutch market increased as a result of the milk scandal in 2008, when some milk powder products in China were found to be contaminated with melamine. The legal export value of baby food to China increased from 190 million euros (247 million dollars) in 2009 to 520 million euros in 2012.

Due to high overseas demand, Dutch State Secretary for Economic Affairs Sharon Dijksma organized a meeting with milk producers, supermarkets and drug stores earlier this month to discuss the issue.

She stated she would do everything to stop the illegal export of milk powder to China by setting up a special team that will track illegal traders.

"I will collect information about the trade of retailers in the Netherlands, so that I can inform the Chinese authorities each time a load of milk powder arrives in China. It will be no longer lucrative to collect milk powder on a large scale in the Netherlands and to send it in big quantities to China," Dijksma warned in a statement.

Meanwhile, the two main producers Nutricia and Friso have set a maximum to the number of packages that can be purchased per customer. Producers also increased production in recent months, but it remains difficult to meet demand, Nutricia said.

The company last week apologized to Dutch consumers in a full-page ad in several newspapers for the shortage of milk powder.

"In the Netherlands, we are faced with an unprecedented demand for Nutrilon in recent months," stated Christophe Wadel, general manager of Nutricia, in the ad. "This increase is mainly attributable to the demand of parents outside the Netherlands."

But not every milk producer is facing the same scarcity problems.

Nestle, another milk powder producer, responded by publishing a full-page ad in newspapers, stating "We have heard that other milk producers have difficulties in producing milk powder for Dutch babies. We would love to take over that task!" (1 euro = 1.30 U.S. dollars)

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