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| Nestle and Danone to lower baby milk prices in China | Nestle and Danone to lower baby milk prices in China |
| (about 2 hours later) | |
| Food giants Nestle and Danone have said they will cut prices of some of their infant milk formula products in China. | Food giants Nestle and Danone have said they will cut prices of some of their infant milk formula products in China. |
| The move comes a day after China launched a probe into alleged price fixing by foreign infant milk makers. | The move comes a day after China launched a probe into alleged price fixing by foreign infant milk makers. |
| Demand for foreign brands has surged in China after tainted milk scandals resulted in distrust of local rivals. | Demand for foreign brands has surged in China after tainted milk scandals resulted in distrust of local rivals. |
| Nestle's unit, Wyeth Nutrition, will slash prices by as much as 20%. Danone said it was co-operating with the probe and was preparing a price-cut proposal. | Nestle's unit, Wyeth Nutrition, will slash prices by as much as 20%. Danone said it was co-operating with the probe and was preparing a price-cut proposal. |
| Nestle also added that it would not raise prices of any new products over the next year. | Nestle also added that it would not raise prices of any new products over the next year. |
| "Wyeth Nutrition has always respected and been willing to abide by China's laws and regulations, and is actively cooperating with the anti-monopoly investigation into the company," the firm was quoted as saying by the AFP news agency. | "Wyeth Nutrition has always respected and been willing to abide by China's laws and regulations, and is actively cooperating with the anti-monopoly investigation into the company," the firm was quoted as saying by the AFP news agency. |
| According to some estimates, foreign brands now account for about half of all infant milk sales in China. | According to some estimates, foreign brands now account for about half of all infant milk sales in China. |
| Nestle, Danone, Mead Johnson Nutrition and Abbott Laboratories are among the firms that are being investigated by the China's National Development and Reform Commission. | |
| Tainted history | Tainted history |
| Over the past few years China has faced a series of milk-related scandals. | Over the past few years China has faced a series of milk-related scandals. |
| In 2008, six infants died of severe kidney damage and an estimated 300,000 babies suffered from kidney stones after drinking tainted baby formula. | In 2008, six infants died of severe kidney damage and an estimated 300,000 babies suffered from kidney stones after drinking tainted baby formula. |
| The formula, from several major Chinese dairy companies, was tested and found to contain melamine, an additive that falsely boosts the protein levels in milk. | The formula, from several major Chinese dairy companies, was tested and found to contain melamine, an additive that falsely boosts the protein levels in milk. |
| In December 2011 and July 2012, two Chinese companies recalled baby formula containing high amounts of aflatoxin, a carcinogen produced by fungus in cows' feed. | In December 2011 and July 2012, two Chinese companies recalled baby formula containing high amounts of aflatoxin, a carcinogen produced by fungus in cows' feed. |
| Last year, another company issued a separate recall after "unusually high" levels of mercury were found in its main line of infant milk powder. | Last year, another company issued a separate recall after "unusually high" levels of mercury were found in its main line of infant milk powder. |
| That has led to Chinese consumers looking to overseas brands, triggering a global surge in demand for the products. | That has led to Chinese consumers looking to overseas brands, triggering a global surge in demand for the products. |
| Analysts said that despite the probe against them foreign brands were likely to remain popular with the consumers. | Analysts said that despite the probe against them foreign brands were likely to remain popular with the consumers. |
| "It is hard to believe that domestic challengers are going to take over from Danone and Nestle in the next couple of years," said Jon Cox, an analyst with Kepler Cheuvreux. | "It is hard to believe that domestic challengers are going to take over from Danone and Nestle in the next couple of years," said Jon Cox, an analyst with Kepler Cheuvreux. |
| "That is some time away, because the issue is that consumers don't trust the product rather than the absence of local competitors." he added. | "That is some time away, because the issue is that consumers don't trust the product rather than the absence of local competitors." he added. |
| The surge in Chinese demand has also resulted in various countries limiting the amount of infant milk purchases. | The surge in Chinese demand has also resulted in various countries limiting the amount of infant milk purchases. |
| Hong Kong, which was the first one to put a ceiling, has barred customers from purchasing more than two cans of formula a day. Those caught breaking the rules face up to two years in prison and a $64,500 fine. | Hong Kong, which was the first one to put a ceiling, has barred customers from purchasing more than two cans of formula a day. Those caught breaking the rules face up to two years in prison and a $64,500 fine. |
| Countries outside Asia have also had to take similar measures, with retailers in Australia and the UK limiting the number of cans of formula that can be sold to a customer within a single day. | Countries outside Asia have also had to take similar measures, with retailers in Australia and the UK limiting the number of cans of formula that can be sold to a customer within a single day. |