Profit from China's rediscovered love for dairy

China's demand for milk is on the rise. But a recent contamination scandal caused panic and led to the closure of several suppliers. But for the brands that consumers still trust, there is a huge opportunity for profit. Eoin Gleeson examines China's milk industry and picks the best bet in the sector.

Last year, China was gripped by a milk scare that caused widespread panic, and resulted in death penalties for two convicted milk suppliers.

It began with the news that Chinese baby formula laced with the industrial chemical melamine had caused the deaths of four infants. As thousands of children showed up in hospitals with kidney stones, supermarket shelves were cleared. Milk exports were banned. Government officials raced to the country's 20,393 milk collection stations (where farmers bring their milk to be processed and sold to suppliers) to seize tainted products.

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Eoin came to MoneyWeek in 2006 having graduated with a MLitt in economics from Trinity College, Dublin. He taught economic history for two years at Trinity, while researching a thesis on how herd behaviour destroys financial markets.