Nutricare hits on formula for success in $2.4bn Chinese market
AN Irish businessman who is targeting China’s $2.4bn baby milk formula business has expanded into 6,000 retail outlets there this week.
Monaghan-born entrepreneur Ross McMahon said the deal triples his supply distribution to mother-and-baby stores in China.
After only 18 months in business, his UK-based firm Kendal Nutricare is on target to hit a turnover of £12m (€14m) in 2017 and is aiming for a turnover of £31m (€35m) by 2021.
The UCD-educated food scientist has struck gold after buying a former Heinz factory in Cumbria in 2015 and investing millions in the plant.
McMahon (52) fought off bidders such as Ireland’s Lakeland Dairies, Kerry Group, the Swiss-based Hero Group and food giant Danone, to acquire the 11-acre site from Heinz as it disposed of non-core assets ahead of its merger with Kraft.
The Clones businessman saved 90 jobs in the process and created an extra 30 positions by developing a new range of baby nutrition brands.
Industry sources estimate it would have cost Heinz £8m to close the Kendal factory but instead Mc Mahon took over all liabilities and purchased it for an undisclosed sum using money he made from property investment in London.
Kendal Nutricare now manufactures Heinz infant formula for the Chinese market, as well as developing its own range of products
The firm also retained contracts to make infant cereals such as porridge for Heinz, and sells to north Africa and Southeast Asia.
The Cumbria factory sources milk from 220 farms in northern England, Scotland and Northern Ireland.
Kendal Nutricare also has contracts with Irish dairy giants including Glanbia, Carberry Foods and Kerry Foods worth about €2m every year.
McMahon sources Irish whey for its Kendamil infant powder and Irish yogurt powder for Kendamil cereals. Its printed metal cans and lids all come from Ireland, too.
“In the next three years we expect to treble our purchases from Ireland,” he said.
In a major coup, Kendamil secured a lucrative £6m deal with Chinese agent Orient International Shanghai Foreign Trade Company and was awarded Chinese accreditation. This means the factory is one of only 75 in the world allowed to export products there.
China imports about three-quarters of its formula from Europe.
European-sourced milk formula has been in huge demand in China since 2008, when six babies were killed and 300,000 made ill from domestic formula products made from milk adulterated with melamine, a toxic chemical which artificially boosted the milk’s protein count.
McMahon said his firm’s infant formula brand appeals to Chinese mothers because it is made to a full-cream, whole-milk recipe, rather than a skimmed recipe relying heavily on vegetable oils ,like that of many of its rivals.
“Kendamil infant formula is made using a traditional fortified recipe of whole full-cream milk to provide all the energy and natural nutrition for a growing baby, compared to our competitors who use fortified skim milk and palm oil,” he said.
Kendamil is preparing to launch a ‘Kendamil Organic’ and a ‘Kendamil Goat’ formula later this year.