MercoPress. South Atlantic News Agency

China's demand for infant milk makes NZ company shares surge 140% in one year

Imported baby milk powder is now the preferred product in China because of the tainted milk scandal in 2008 which killed six children and left 300.000 ill

Shares in New Zealand dairy firm - The a2 Milk Company (A2) - were up more than 30% in Sydney on Friday after the firm raised its full-year earnings forecast on demand for its infant formula in China and Australia. It is the second time since November the company has raised its guidance.A2 said group revenue could reach US$ 212 million for the period, up from US$180.

 The firm's shares have soared close to 140% in the year to date.

Imported baby milk powder is now the preferred product in China. A deadly tainted milk scandal in 2008 that led to at least six children dying and some 300,000 falling ill has seen wary Chinese consumers switch to products made in Australia or New Zealand.

The a2 Milk Company said that China's level of faith in imported products is so strong - they did not need to change their packaging for sale on the mainland.

“Chinese buyers want to know the products are from Australia or New Zealand, so we don't have to repackage or use Chinese language on the products,” a spokesman for the firm said.

A tin of the firm's infant baby milk powder sells for US$23.50 in Australia and close to US$40 in China.

A2's chief executive Geoffrey Babidge said the firm's latest guidance provided further evidence of the increasing appeal of the firm's infant formula in Australia and China “and the growth potential in additional markets in the future”.

However, demand from Chinese consumers has resulted in shortages of infant milk formula supplies at a domestic level.

November, rival milk production company Bellamy's Australia apologized to its customers after many of them were unable to find cans of formula in their local supermarket.

The Tasmania-based firm, which makes Australia's only certified organic infant formula, blamed “unprecedented demand” for its products and said that ”purchases of products solely for the practice of on‐selling in overseas markets has led to limited stocks of [its] products on the shelves of Australian retailers“.

Soon afterwards, the firm raised its prices for popular organic infant formula, blaming ”global demand over recent years“.

”The cost of organic milk is now three times the cost of conventional milk and regrettably we are no longer in a position where we can maintain our current pricing,” Bellamy's said on its website.