Baby formula makers ‘pulling supply to locals’ for China market

Coles has hit back at claims retailers are to blame for shortages of baby formula as Chinese demand soars and tensions rise.

Australia’s biggest retail chain has hit back at claims retailers are responsible for a baby formula shortage in the face of growing demand from Chinese consumers as tensions escalate.

Coles managing director John Durkan said suggestions retailers were to blame for the “industry-wide issue” was “simply politicking”, claiming some formula makers were pulling back supplies to local retailers.

This week, senator Richard Colbeck suggested the problem appeared to be a retail issue.

However, Mr Durkan yesterday said Senator Colbeck’s comments did not reflect his recollection of a conversation between them.

Australian supermarkets and chemists reportedly have sold out of some premium formula brands in recent months as demand escalates in China. In a thriving “greymarket”, budding entrepreneurs, often Chinese students and immigrants, have snapped up products from local shelves to sell online in China.

The issue has erupted on social media and internet forums and prompted calls for the government to intervene.

Mr Durkan said Coles had imposed a four-tin limit but could not discriminate or demand customers prove they had a baby. Woolworths recently introduced a four-tin limit.

“We are simply not getting enough formula supplied and we have to service all of our customers,” Mr Durkan said. “Some of our suppliers are not delivering the amounts that we are ordering, and some ... are choosing to sell directly to customers overseas rather than supply their customers here in Australia.”

Senator Colbeck agreed with Mr Durkan and said part of the solution was increasing supply.

“I’m not blaming anyone,” he said. He said he was prepared to continue talks with industry.

Consumer advocacy group Choice has called on the federal government to guarantee the supply of infant formula for ­babies aged under 12 months. The group has asked parents to report shortages on their website and called on the government to look at solutions in Hong Kong and New Zealand, where there had been similar shortages.

A2 chief executive Peter Nathan denied his company had pulled back local supply. Despite increased Chinese demand, “we have been steadily increasing supply to the local market”.

Another maker, Bellamy’s, did not return calls yesterday but has said previously it was affected by “unprecedented demand”.

A Danone Nutricia spokeswoman said while the company had increased production fourfold in the past three months, it remained limited by the ingredients available and the amount that could be produced each day.