U.S. Companies Exporting Infant Formula to China (as of March...

U.S. Companies Exporting Infant Formula to China (as of March 2025):

1.Abbott Laboratories (Illinois)

•Abbott’s infant formula products, including Similac, are available in the Chinese market.

2.Mead Johnson Nutrition (Illinois)

•Now part of Reckitt Benckiser, Mead Johnson continues to offer infant formula products like Enfamil in China. The company recently announced a two-pronged strategy focusing on both infant and adult nutrition in the Chinese market.

3.Perrigo Company PLC (Michigan)

•Perrigo exports infant formula products to China, including store-brand formulas. In November 2022, Perrigo acquired Nestlé’s Good Start brand and a manufacturing facility in Wisconsin, expanding its product offerings.

4.Nestlé (Switzerland)

•Nestlé exports infant formula products to China, including Gerber and NAN. In November 2022, Nestlé sold its Good Start brand and associated U.S. manufacturing facilities to Perrigo.

Impact of the 10% Tariff on U.S. Dairy Products:

The 10% tariff imposed by China on U.S. dairy ingredients is expected to impact the cost structures of the companies exporting infant formula to China:

•Abbott Laboratories: Relies on U.S.-sourced dairy ingredients for its infant formula products. The tariff is likely to increase production costs, which could lead to higher prices in China and reduced competitiveness.

•Mead Johnson (Reckitt Benckiser): Sources dairy ingredients from the U.S. for its infant formula. The tariff may raise production costs, potentially affecting pricing strategies in the Chinese market.

•Perrigo Company PLC: Imports U.S.-sourced dairy ingredients for its infant formula products. The tariff could increase costs, potentially affecting product pricing and competitiveness.

•Nestlé: While based in Switzerland, Nestlé’s U.S. operations source dairy ingredients from the U.S. for some infant formula products. The 10% tariff may impact ingredient costs, possibly influencing product pricing in China.

Nestlé’s Gerber and NAN Baby Formula:

•Gerber: Owned by Nestlé, Gerber baby formula is primarily manufactured in the U.S. with main production facilities in Florence, South Carolina, and other U.S. locations.

•NAN: Produced in several countries, including the U.S., Switzerland, and New Zealand. Specific production locations depend on the product variant and regional market.

Chinese Companies Importing U.S. Dairy Ingredients:

1.Mengniu Dairy (Inner Mongolia Mengniu Dairy)

•Headquarters: Hohhot, Inner Mongolia, China

•Impact of Tariff: Mengniu imports U.S. dairy ingredients, and the 10% tariff will raise the cost of sourcing these ingredients, potentially impacting production expenses and pricing strategies.

2.Yili Group

•Headquarters: Hohhot, Inner Mongolia, China

•Impact of Tariff: Yili imports dairy ingredients from the U.S., and the tariff could increase production costs, affecting profit margins and competitiveness in the market.

3.Bright Dairy & Food Co., Ltd.

•Headquarters: Shanghai, China

•Impact of Tariff: The tariff will increase the cost of dairy ingredients imported from the U.S., potentially raising production costs and affecting pricing strategies for their products.

4.Feihe International!!!!!
Market share leader.

•Headquarters: Beijing, China

•Impact of Tariff: Feihe imports U.S. dairy ingredients for its infant formula production. The tariff could increase ingredient costs, potentially affecting pricing and competitiveness.

Regulatory Considerations:

•Import Regulations: China requires foreign manufacturers of infant formula to register their facilities with the General Administration of Customs (GACC) before exporting to China.

•Trade Tensions and Tariffs: The 10% tariff on U.S. dairy ingredients is part of broader trade tensions between China and the U.S. This tariff can significantly impact the cost structure of U.S.-based companies exporting to China.

Some big names in there. Is This a Big Deal?

The 10% tariff is not an insignificant charge. While it may not make it impossible for U.S. companies to continue business, it is likely to affect profitability, pricing strategies, and overall competitiveness. U.S. companies will need to carefully manage these increased costs through price adjustments, cost-saving initiatives, or supply chain modifications.

For larger multinationals, such as Abbott or Nestlé, it may be a manageable cost, but for smaller companies with thinner margins, the tariff could pose more of a challenge. This presents an opportunity for competitors like A2 Milk, which does not rely on U.S. dairy ingredients and could gain market share in China as a result of these tariff-induced price increases.

We now have a distinct advantage over U.S.-based competitors and those using US ingredients who are now facing higher production costs due to the tariff. This cost savings enables A2M to maintain competitive pricing, even as other brands raise their prices to offset the increased costs from the tariff. A2M could draw more price-sensitive consumers away from these competitors, taking market share, especially as the price gap widens due to the tariff impact on U.S. products. A2M has a significant opportunity here.