NESTLE TO PROFIT FROM CHINA MILK SCANDAL

       Nestle, the world's largest food company, says sales growth in China may double to 20 per cent this year as it takes market share from rivals affected by last year's tainted - milk scandal.
       "We have gained market share, all our businesses, our branding is stronger and we had greater market recognition," Patrice Bula, chairman and chief executive officer of Nestle (China), said in an interview in Shanghai. "In the milk crisis, we were not part of it, we're not directly affected by it because all our products are safe."
       Milk tainted with melamine caused the deaths of at least six babies and sickened almost 300,000 other children in China last year. Government tests found the toxic chemical, used in making plastics, in the products of 22 companies including China Mengniu Dairy, the nation's biggest liquid-milk producer.
       "The made - in - China label is really damaging and a lot of Chinese consumers don't like it," Shaun Rein, managing director of China Market Research Group in Shanghai, said yesterday. "Nestle has the ability to increase market share, partly because everybody's fleeing the domestic producers."
       Mengniu posted a 949-million yuan (Bt4.87 billion) net loss last year as a result of the scandal. Company profit rose 29 per cent to 936 million yuan the previous year.
       Government support has helped the Chinese dairy industry increase consumption and industry sales are now equal to about 90 per cent of the level before the scandal, Bula said.
       Switzerland-based Nestle operates 21 factories in China and sells products including Nescafe instant coffee and Kit Kat chocolate wafer bars. Sales in China, Hong Kong and Taiwan rose 10 per cent last year to 2.23 billion Swiss francs (Bt72 billion), 2 per cent of global revenue, according to the company's website.
       The food and beverage maker aims to introduces" to accelerate sales growth in the fourth quarter, Bula said. Nestle's coffee, bouillon, milk and ice cream are among its best-selling products in China, Bula added.
       "The industry is at a stage of restructuring, where we are beginning to see which are the good companies that produce good quality products," said Rong Yaozhong, general manager of Shanghai Totle Food, Nestle's venture partner for Chicken bouillon.
       "A lot of companies will imp rive the quality of their products while those that fail to meet set standards will be shut."