August 22, 2014 / 9:02 AM / 4 years ago

After food safety scares, China retailer offers baby milk insurance

HONG KONG (Reuters) - A Chinese retailer is offering insurance to customers who buy infant milk powder, highlighting the lengths to which companies are going to address concerns about food safety in China.

Suning Commerce Group Ltd 002024.SZ, which owns the Redbaby chain of stores, told Reuters it had launched the policy this week, backed by China’s second largest insurer Ping An Insurance Group (601318.SS) (2318.HK).

The policy stipulates that if a brand of milk powder is recalled, customers who bought cans from any Redbaby store or its e-commerce website would be paid up to 2,000 yuan (196 pound) per can, with payments capped at 100,000 yuan.

“In recent years, the milk powder market in China has been in a mess,” Suning said in an email.

“We realised that parents pay a great deal of attention to their children’s health and safety, and in particular, the safety of their infants’ foods,” it added. Insurer Ping An said Suning’s policy is the first of its kind in China.

Concerns about the safety of baby milk powder came to the fore in 2008 when thousands of infants fell sick and six died after an industrial chemical was added to raise the apparent protein content of certain products.

Pharmacies in Hong Kong, where food safety regulations are perceived to be more stringent, saw a run on baby formula following the scandal and many Chinese still travel into the city, a special administrative region, to buy baby milk powder.

Suning said it was giving the insurance away for free for the first 40,000 cans of baby formula sold. After that, customers can buy the insurance online.

According to its e-commerce site, Redbaby stocks milk formula from multinationals including Mead Johnson Nutrition MJN.N, Nestle SA NESN.VX, Danone SA (DANO.PA) as well as brands made by China’s New Hope Nutritional Foods Co in partnership with New Zealand’s Synlait Milk Ltd (SML.NZ).

Along with detailed nutritional information, the website also highlights the expiry date of each can of formula.

Food safety remains a major concern in China. Earlier this week, U.S. foodmaker H.J. Heinz Co was forced to recall some of its infant food products because they were found to contain excess levels of lead. [ID:nL4N0QP1E3]

KFC parent Yum Brands Inc (YUM.N), McDonald’s Corp (MCD.N), Wal-Mart Stores Inc (WMT.N) and Fonterra Co-operative Group Ltd (FCGHA.NZ) have also recently faced food safety scares.

($1 = 6.1543 Chinese yuan)

Additional reporting by Donny Kwok; Editing by Miral Fahmy

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