Pack and Blend CNCA's, page-4

The Australian understands Bellamy’s Organic is considering buying Melbourne-based contract infant formula canning facility Blend and Pack, which holds one of eight Certification and Accreditation Administration (CNCA) infant formula import approval licences issued by Chinese authorities to processing and packing plants in Australia.
Such a move suggests Bellamy’s is attempting to put this year’s bitter boardroom split behind it and acting chief executive Andrew Cohen is taking steps to secure a longer-term future for the one-time market darling. The factory grab also highlights a behind-the-scenes battle among infant formula producers to secure coveted “slots” into the giant Chinese market.
Bellamy’s issued a statement to disallowed yesterday that it could not guarantee its infant formula and toddler nutritional powder brands would be able to be sold in China from January next year, when the Chinese regulator’s crackdown on the number of Australian infant formula brands licenced to be sold in the country kicks in.
From January, only Australian infant formula brands and tins that are packed at a Chinese-accredited canning factory will be able to secure China Food and Drug Administration registration, with the eight CNCA plants restricted to producing just two main brands each from 2018.
Bellamy’s wobbly share price toppled a further 8.3 per cent yesterday to $4.10, further eroding the value of the former $1.5 billion market-darling company which crashed in December and into January after badly over-estimating China sales, poor market disclosure, the twin loss of its chairman and chief executive and a five-week trading halt.
Bellamy’s lost its access to a CNCA-approved canning facility in February when rival Bega Cheese sold its Tatura Milk canning plant at Derrimut on Melbourne’s outskirts — where Bellamy’s previously had most of its China-destined infant formula tins contract-packed and stamped with the Derrimut plant’s CNCA approval number — to American giant Mead Johnson.
Mead Johnson, which produces the world’s biggest infant formula brand Enfamil, intends to reserve the two CNCA-brand export “slots” linked to its licenced Derrimut infant formula canning plant for its own products, effectively locking out Bellamy’s Organic brand.
While Bellamy’s also has some of its organic infant formula manufactured and canned by Fonterra at its Darnum plant near Warragul, Fonterra does not have a CNCA licence attached to its specialist Darnum facility.
This means all Bellamy’s branded infant formula and toddler mix tins produced under contract by Fonterra in Australia can only be sold in Australian supermarkets and chemists, and are not approved for export to China.
However many of these Fonterra-packed Bellamy’s tins quickly make their way to Chinese consumers after being bought by local “daigou” shoppers, and dispatched via post to their buyers in China, despite lacking CNCA certification stamps.
Bellamy’s makes more than 20 million tins of infant formula annually — which retail for between $30-$35 each. More than half of its product was sold to China in the months before its spectacular crash.
“Bellamy’s confirms that following discussions with Bega, its People’s Republic of China products can no longer be registered (for export) at Bega’s Derrimut canning line,” the company said in a statement yesterday.
“The company continues to review multiple alternatives in relation to obtaining CFDA registration for its products; while it is confident it can achieve registration with the CFDA, it does not anticipate that it will be in place by January 2018.”
But Bellamy’s chances of successfully snaring the strategic Pack and Blend canning plant — currently for sale through PricewaterhouseCoopers for about $10m-$15m — are not assured.
Other infant formula brands are also playing musical chairs in their bid to lock down precious access to the eight CNCA-approved canning facilities and so be eligible for export registration.