May 17, 2017
China market for infant milk formula set to boom, says new research
China's infant milk formula (IMF) market is poised to grow impressively in the next five years as a result of the upgraded one-child to two-child policy and tightened regulations issued by the China Food and Drug Administration.
New research from Mintel predicts that the market volume of infant milk formula in China will grow by a CAGR (compounded annual growth rate) of 5.4% between 2016 and 2021. Mintel also revealed that organic options could be the driving force of the growth, as 75% of Chinese mothers feed their babies organic infant milk formula.
Younger mothers particularly are interested in organic formula options, with 79% of them aged 25-34 using this product. China's new middle class also over-index on organic infant milk formula usage, with nine in 10 (89%) saying they use these products—a significantly higher proportion than consumers overall (72%).
It was also found that liquid IMF has yet to gain awareness in the Chinese market, despite its popular reputation in the West. Research from Mintel Global New Products Database (GNPD) showed that the UK and the US lead in liquid infant milk formula launch activity with 41.7% of launches in 2016 occurring in the UK and 21.4% in the US, while none were launched in China.
"Our research indicates that high-end and niche baby food and drink products have great potential in the Chinese market. Organic infant milk formula has experienced a high adoption rate, indicating that consumers with more spending power are willing to pay a premium for products they perceive to be better for their infants", said Cheryl Ni, food and drink analyst at Mintel.
Preference for foreign IMF
Mintel also found that 65% of surveyed mothers used foreign-branded IMF in the six months prior to December 2016, when the survey was conducted, compared with one third (33%) who used local IMF. However, brand selection changed when considering the number of children in the household, in light of China's two-child policy.
Chinese brands were more popular among mothers who had two or more babies (44% compared with 33% overall) and the penetration of foreign brands climbed to 70% among those who did not plan to have a second child.
Regarding milk source, more than half (57%) of Chinese moms think products from Australia or New Zealand are better than those from other milk sources. Only 18% of Chinese moms think the milk source in China is associated with a premium image.
Mintel data revealed that Chinese mothers are particularly serious about breastfeeding when their babies are younger than six months, with the percentage of moms reaching 90%. However, most moms switch to IMF when their babies are between six and 12 months, as Mintel research showed that the proportion of moms who used IMF more than once a day rose to 71% from 47% during this crucial period.
"The rise of breastfeeding will have a direct impact on the sales of infant milk products. However, some brands are already recognising the issue, and are expanding product portfolios to gain a competitive edge by offering milk formula products for pregnant and lactating women, as well as by offering advice on pregnant/lactating women's diet, recipe and exercise, among others", Ni said.