Yesterday, infant formula producer and distributor Emerald Dairy, Inc. released news that it has formed a supplier agreement with Si Ming Yao Ye, a Guangdong-based pharmacy chain, for Emerald Dairy’s recently-launched Xinganling® “Organic” infant formula.

Organic infant formulas are a premium product category in China and mostly marketed in tier one and two cities like Guangzhou. In June 2009, Emerald Dairy started to develop an organic baby formula line for the high-end market. After 16 months of monitoring and product testing, the Guangdong Zhongjiang Certification Co (GZCC) approved Emerald Dairy’s organic farming operation. Emerald Dairy now uses the China Organic Product seal on its organic formula packaging and in associated marketing materials.

“Achieving the organic product certification was a rigorous process and we are pleased our new production line in Hailun and our organic farming operations passed inspection,” began Yongshan Yang, Chairman and CEO of Emerald Dairy. ”While the organic products market in China is still a niche segment, both locally-made and imported products are gaining market acceptance among Chinese consumers. The China Organic Product certification and seal is a critical component of the advertising and branding strategy of our new product line and will help us realize gross margins on our organic formula of 60%. We anticipate Xinganling® “Organic” Formula will account for a growing percentage of revenues in 2011 which will confirm Emerald’s position as a high-quality supplier in the dairy industry.”

The first stocking orders under the agreement have shipped from Emerald Dairy’s distributors to 230 of Si Ming Yao Ye’s 2000 stores. Xinganling® “Organic” will be shelved in the infant and baby product aisles to compete against international and local organic brands. Xinganling® “Organic” will be sold at a competitive price point of 218 Yuan ($33.00) per 900 gram can, and through normal consumption, will last a child approximately two weeks.