China has developed a reputation for a lack of due diligence and safety protocols over products made specifically for children ranging from toys to food. Although the stigma was waning in the minds of concerned American parents, recent bad news relating to that trend has reinforced them.
On Monday, Hunan Ava Dairy Industry Co. announced that it was recalling its infant formula after Chinese officials found a carcinogen in its ingredients. While low amounts of the carcinogen, aflatoxin, are not harmful, in larger doses it has been linked to serious diseases like liver cancer. The substance harvests itself in milk and has previously been found in the products of two of the country’s largest dairy companies, Mengniu and Changfu.
This marks a troubling trend for Chinese dairy companies. In June, the country’s largest dairy producer in terms of sales was forced to issue a recall after mercury was discovered in its milk. Last December, the country’s second largest producer was forced to do the same. Since 2008 when over 300,000 people were poisoned and six infants died from the presence of an industrial chemical in domestically produced milk. Naturally, Chinese consumers are joining their foreign counterparts and buying “Anything but Chinese” when it comes to their children.
The Chinese government has been imploring companies to use large, centralized facilities rather than smaller farms that are more difficult to oversee. If Chinese producers were able to get their act together this could indeed be a profitable market, as Chinese domestic sales of dairy rose 8.5% last year.
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Parents tend to feel very strongly about exposing their children to toxins, and mistakes like these are typically deemed inexcusable by parents. It will be difficult for Chinese producers to recover the trust of their people and those around the world.
Concerns over toxins extends beyond formulas, but also to toys, lotions, diapers, toothpastes and more. This shake in consumer confidence presents a clear opportunity for more trusted American manufacturers who market baby products to gain increasing shares of the global market.
With this in mind, we have compiled a list of companies with a stake in infant products worth keeping an eye on.
Use the Turbo Chart to Compare the Performance of the First Two Companies in the List to the S&P 500:
1. Mead Johnson Nutrition Company (MJN, Earnings, Analysts, Financials): Distributes, and sells infant formulas, children’s nutritional products, and other nutritional products. The Company markets its portfolio of more than 70 products to mothers, health care professionals and retailers in more than 50 countries in Asia, North America, Latin America and Europe. Market cap at $14.87B, most recent closing price at $72.94.
2. Johnson & Johnson (JNJ, Earnings, Analysts, Financials): Engages in the research and development, manufacture, and sale of various products in the health care field worldwide. JNJ has an extensive baby care product line ranging from wipes and shampoos to lotions. Market cap at $187.06B, most recent closing price at $68.11.
3. Procter & Gamble Co. (PG, Earnings, Analysts, Financials): Provides consumer packaged goods in the United States and internationally, including popular diaper brands. Market cap at $176.44B, most recent closing price at $64.39.
4. Mattel Inc. (MAT, Earnings, Analysts, Financials): Engages in the design, manufacture, and marketing of various toy products worldwide. Notable product lines include Fisher Price, Barbie, Hot Wheels, Matchbox toys, American Girl dolls, and a variety of popular board games. Market cap at $11.71B, most recent closing price at $34.39.
Written by Dan Connelly
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