Intl postal services make hay from baby formula shipments

"The consumer in China－mothers, pediatricians－consider the best-quality milk in the world comes from Europe," Faber told reporters in Paris on Feb 20. Most of Danone's European sales growth in the fourth quarter came from exporting products to Asia.

A gray market for foreign infant formula has sprouted since melamine-tainted milk killed six infants in China in 2008. The substance, used to make plastics and in tanning leather, can disguise diluted milk by making it appear to contain more protein.

"If you think of the scandals, the reality is that we in the West hear about the worst, but there's stuff going on all the time," said Robert Waldschmidt, an analyst at Liberum Capital in London. In 2011, China Mengniu Dairy Co said moldy cattle feed led to excessive toxins in its milk.

The practice of buying products abroad has become known as "haitao," and sometimes it's done through middlemen who help handle payment and delivery. Duty is not paid on about $1.5 billion of infant formula sold online, according to Mead Johnson Chief Executive Officer Peter Kasper Jakobsen.

Last year, customs authorities tightened rules by requiring importers to inform them of orders and payments beforehand, according to Fung Business Intelligence Center. The government will probably take further measures, said Kasper Jakobsen, who recently met Chinese Vice-Premier Wang Yang in Chicago to discuss the matter.

"China is acutely aware of the fact that they must get a grip on all of the different sales channels," he said at a Feb17 investor presentation.

To be sure, PostNL isn't banking on the milk-powder delivery business continuing as it has been for the long-term. Milk powder is one reason for the Dutch package shipper's forecast of mid-single-digit parcel growth this year, though it could drop off, Chief Executive Officer Herna Verhagen told investors on Feb 23.