Bega Cheese is working on making traceable tins of infant formula amid fears about a black market for the so-called "white gold".
Bega says it's investing in new coding systems that will enable it to trace formula tins as part of a crackdown on fake products.
"There's become a bit of a black market in used infant formula cans, would you believe," executive chairman Barry Irvin said on Wednesday.
"This is all about a secure high quality supply chain of product that you can depend upon."
The move by Bega comes after the recent shortages of the so-called "white gold" on Australian supermarket shelves caused by shoppers bulk buying formula to ship to China has fuelled a counterfeit trade.
News.com.au claimed in January that formula tins were being recycled in China and filled with fake product.
Bega Cheese recently set up a joint venture with vitamin maker Blackmore's to sell infant formula in Australia and overseas.
So far 80 per cent of their infant formula goes to Australian stores, and 20 per cent to China, with the product in China set to increase as the business develops.
The partnership with Blackmore's is a cornerstone of Bega's strategy to diversify into areas other than from commodities.
"You can be famous for more than one thing," Mr Irvin said.
"We have always said we are not going to invest in all things dairy."
Bega Cheese and Blackmore's have plans to expand the their range beyond infant formula to products for the elderly and diabetics.
"This is about so much more than infant formula and we have a long view on this partnership," Mr Irvin said.
His comments came as Bega reported its first half profit more than doubled to $14.5 million as cost cuts helped offset weaker diary prices.
Revenue lifted by only 1.6 per cent to $561.4 million, a symptom, Mr Irvin said, of the drop in global commodity prices which has put pressure on the domestic milk market.
BEGA CHEESE
* Net profit $14.5m vs $6.1m * Revenue up 1.6pct to $561.4m
* Interim dividend up 0.5 cents to 4.5 cents
