NZ's Synlait inks U.S. deal to supply grass-fed milk formula

[June 18, 2015]  WELLINGTON (Reuters) - Milk powder maker Synlait on Thursday said it had signed an agreement with a U.S. baby products company to supply milk formula sourced from grass-fed cows, marking the New Zealand processor's first foray into the U.S. market.

Under the agreement with Munchkin, which develops accessories and apparel for infants and toddlers, Synlait plans to begin supplying the premium milk formula beginning later in the year.

Synlait, which sells wholesale milk formula to some of the world's largest consumer brands, said the deal would enable the company to avoid becoming too dependent on major market China.

"We are cognizant of ensuring our infant formula business does not become overly reliant on the China market," Synlait managing director John Penno said in a statement.

Synlait, which is part-owned by China's Bright Dairy & Food, sells roughly 25 percent of its production in China, where demand for dairy products has cooled in the past year after surging since 2008.

The formula will be made from milk from cows which are raised in pastures, demand for which Munchkin said has been growing in its home market because of the perceived health benefits compared with milk from grain-fed cows.

New Zealand cows are raised and mainly fed on pastures, in contrast with grain-fed cows which make up the majority of milk production in the United States.

"It's really embracing the traditional New Zealand dairy framing system, cows outside, grazing pasture and crops without any supplementary feed and without being put in barns," Penno said.

(Reporting by Naomi Tajitsu; Editing by Stephen Coates)

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