Chinese tourists raid Danish supermarkets for infant milk powder

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By Julie Astrid Thomsen

COPENHAGEN, Dec (Shanghai: 600875.SS - news) 15 (Reuters) - Following a string of food safety scandals, Chinese tourists visiting Copenhagen have this year stocked up on Danish-made organic infant milk formula, prompting some supermarkets to limit the number of cans each customer can buy.

More conventional exports are strong too. Arla Foods, one of Europe's biggest dairy companies, says Chinese demand for premium products and high food safety standards in Denmark have helped it almost double its sales to China this year.

Food safety has been an important issue in China since a 2008 scandal killed six infants who had been fed milk powder that had been adulterated with the toxic melamine, normally used to make plastics.

Milk powder and long-lasting UHT milk account for most of Arla's exports to China but its organic infant formula is gaining popularity among Chinese consumers, said Arla Foods' Chief Executive Peder Tuborgh.

"We found a niche in the market for organic infant formula that didn't exist even two years ago but it's starting to unfold and that's part of what drives the revenue growth," Tuborgh said in an interview.

Strong Chinese appetite for Western luxury goods such as handbags and watches has been well documented for years.

More recently, retailers across Europe and in countries including Australia and New Zealand have also seen Chinese travellers seek out infant milk powder in response to food safety concerns.

French food company Danone (LSE: 0KFX.L - news) said sales of baby milk formula in China itself rose strongly in the third quarter.

Arla and Danone are facing fierce competition in the China baby food market from Nestle (Swiss: NESN.VX - news) and Reckitt Benckiser (Xetra: A0M1W6 - news) .

"China is probably the most competitive dairy market in the world," Tuborgh said.

Exports to China are set to reach 100 million euros ($118 million) this year, up from 55.9 million in 2016 and 51.7 million the year before, he said. He expects growth rates of 25-30 percent in the coming years.

As a result of higher demand, Chinese visitors to Denmark have raided supermarket shelves for locally-made organic infant milk formula, leaving some retailers scrambling to supply domestic consumers.

In October, Denmark's biggest supermarket chain Coop was forced to limit the amount of milk formula to 7 kilos (12 cans) per customer, after seeing some Chinese shoppers literally empty their shelves buying more than 40 kilos.

Arla's organic infant milk powder can fetch three to four times the price in China compared to the price in Denmark. ($1 = 0.8487 euros) (Reporting by Julie Astrid Thomsen; Editing by Jacob Gronholt-Pedersen and Keith Weir)