November 12, 2024
(press release)
–
The combination of falling birth rates and intense competition has prompted several dairy producers in China to concentrate more on adult nutrition rather than infant nutrition. This strategic realignment is a response to the shrinking market for infant products, as fewer births translate to a smaller customer base for infant formula and related products. By redirecting their resources and expertise, these producers aim to establish a stronger foothold in a rapidly evolving market landscape. Volume sales of the baby milk category in China are set to decline at a negative compound annual growth rate (CAGR) of 1–3% during 2023–29^, says GlobalData, a leading data and analytics company. Mani Bhushan Shukla, Consumer Analyst at GlobalData, comments: “The Chinese market for infant milk is seeing a notable shift, with international brands that once led the industry now facing fierce competition from domestic producers. Following the 2008 Chinese melamine scandal, these domestic brands have significantly improved their operations by adopting strict quality measures and upgrading their manufacturing facilities. This has led to a growing acceptance among Chinese consumers of domestic baby milk products, which are considered both nutritious and more affordable. “With the fierce competition in China’s infant dairy industry, brands are striving to differentiate themselves by employing a multi-tier classification system that distinguishes their products based on quality, ranging from basic to premium, super-premium, and hyper-premium. While nearly every city in China hosts a domestic dairy producer, government actions to improve safety standards have spurred consolidation in the sector.” Elyn Gao, Business Development Director, China, GlobalData, notes: “In 2023, China recorded its lowest birth rate ever at 6.4 births per 1,000 people, coupled with a rapidly aging demographic*. This demographic transition is anticipated to have profound implications for both the economy and businesses. Consequently, dairy manufacturers are making concerted efforts to strategically diversify into adult and medical nutrition to counterbalance this. The ongoing trend has prompted international dairy producers, including New Zealand’s A2 Milk, Fonterra, Danone, Abbott Laboratories, and Nestlé, to roll out new milk products tailored for the adult and aging demographic in China. Concurrently, domestic companies like Feihe and Yili are entering the adult nutrition space.” Shukla adds: “Consumers are now more health-conscious and look for ways to enhance their fitness, spurring the demand for adult nutrition products. The industry’s focus on innovation and product development has also led to the introduction of new products that cater to specific dietary needs, such as vegan, keto, and paleo diets. This has resulted in a wider variety of adult nutrition products in the market, further fueling growth in the sector. A survey corroborates this trend, where 50% of Chinese respondents stated that they have been buying sports and active nutrition products, including protein bars and energy gels, more often in the last three months. Similarly, 49% of respondents indicated they have also been buying dietary supplements more frequently**.” Gao continues: “The Healthy China 2030 initiative is also driving expansion in the Chinese adult nutrition market. Furthermore, the COVID-19 pandemic has heightened consumer focus on health, driving demand for products that enhance physical wellbeing and emotional balance. Consumers seek products promoting sustained energy, hydration, and immune and digestive support. Awareness of gut health and interest in ingredients like prebiotic fiber and botanicals are on the rise. The demand for prebiotic fiber is expected to rise due to its benefits in digestion and weight management. Manufacturers are responding with products featuring plant-based, low-sugar, and gluten-free claims to cater to discerning consumers scrutinizing product labels.” Shukla concludes: “The focus on adult nutrition has intensified in recent years, driven by manufacturers’ growing awareness of the aging population’s needs and the increasing demand for products that enhance immune health and support bones, joints, and muscles. Consequently, several international dairy producers have withdrawn from this competitive market. A notable instance is Abbott Laboratories, which ceased its infant formula production in China at the end of 2022 to redirect its focus toward adult nutrition.” ^GlobalData Consumer Goods Intelligence Center – Market Analyzers, accessed in November 2024 *China National Bureau of Statistics (NBS), 2023 **GlobalData Q3 2024 Consumer Survey – China, published in October 2024, with 513 respondents
* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.
