Nestle's Wyeth Deal Cements Foreign Dominance in China's Formula Market

Nestle SA's takeover of Pfizer Inc's (NYSE: PFE) Wyeth division will make China's infant formula market more concentrated, experts say.

China's $30 billion infant formula market is growing 10% annually as local women tend to resume working after giving birth and are loath to breast-feed on fears of gaining weight.

Frequent food safety scandals are another major concern for those favoring foreign brands.

Wyeth collects 85% of its takings from emerging markets, particularly in China, where a large population means more births.

Nestle will control Wyeth's SMA, Promil and S-26 Gold brands, which are more well-known than Nestle's own Nan, Gerber, Lactogen and Nestogen products in China's infant formula market.

The acquisition will help Nestle's share of China's infant formula market climb by 4.72 percentage points to 15.3%, overtaking Mead Johnson's (NYSE: MJN) 12.06% and trailing market leader Dumex's 16.76%, according to CIConsulting, a leading Chinese research firm.

Nestle bought out Wyeth for $11.85 billion after outbidding Danone and Mead Johnson. The amount was above the $10 billion the market had expected.