Dairy cultures specialist Chr Hansen is seeking to capitalise on greater Chinese health awareness and economic prosperity by forming an alliance with China's largest dairy, Mengniu, to develop probiotic products for a dairy market, which the Chinese government expects to grow tenfold in the next decade.
Hansen's regional vice president for the Middle East and the Asia/Pacific, Mogens Riber-Nielson, said the partnership was part of the Danish company's strategy to develop probiotic products in the Asian region. "We've detected a high interest in probiotics in many Asian markets. China is just the first step," he said. Moves into Korea, Taiwan and Thailand were planned, along with an enlarged Japanese presence.
"There is a misconception in the West that Asians either don't tolerate or don't fancy dairy products. But the major dairy players like Arla and Fonterra are partnering up with Asian companies to produce various dairy products," he said.
Fellow Danish probiotics supplier, Danisco, is also active in Asia, marketing its probiotic cultures in China and establishing an innovation centre in Singapore.
Under the terms of the Hansen deal, it will help train Mengniu's employees and advise on marketing. In return, Hansen will be Inner Mongolia-based Mengniu's preferred supplier.
Riber-Nielson said the probiotic ingredient, BB-12, is being shipped to China from production sites in Denmark, France and the US, although Chinese production is a possibility in the future.
The first products would hit the market in early 2006, sell at a premium over regular milk, and be similar in formulation and design to the one-shot yoghurt drinks that have been so successful in Europe.
"The growing affluent classes in China pick up health trends even more quickly than affluent Westerners, especially the younger generation," Riber-Nielson said. "Mengniu and ourselves are also actively involved in education campaigns through websites, mainstream media, trade fairs and other outlets to further raise the profile of probiotics. We feel it is important to establish market share as bigger players like Danone are yet to trap the market."
Chinese probiotic offerings recorded substantial growth in the past year. Hansen estimated 10-20 per cent of Chinese yoghurt drinks now contain probiotics from virtual non-existence a year ago, even if the presence of probiotic cultures was not flagged to consumers. However, culture quality has lacked the scientific backing and efficacious guarantees that Hansen and other major ingredients suppliers such as Danisco bring to the table, he said.