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.
Research from GlobalData, a leading data and analytics company, said 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.
Fierce Competition
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 to 2029, said GlobalData.
Mani Bhushan Shukla, Consumer Analyst at GlobalData, said, “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.
Strategically Diversify
"This has led to a growing acceptance among Chinese consumers of domestic baby milk products, which are considered both nutritious and more affordable.”
Elyn Gao, Business Development Director, China, GlobalData, added, “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.”
