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China is the world’s largest infant formula market, consuming 800,000t of product last year. It is also the world’s most valuable infant formula market, with retail sales of baby formula at close to €30bn last year.
The rapidly expanding middle class in China has seen the country’s demand for infant formula balloon over the last decade, particularly for high-quality imported product.
Since 2014, Chinese imports of infant formula have more than doubled and stood at an estimated 330,000t last year, according to a detailed new report on the Chinese infant formula market produced by Teno Business Insight and Performance.
Eamonn Burke, director at Teno, says China’s infant formula market will only continue to evolve but Europe is the main supplier of imported infant formula.
“Around 75% of imported formula is from Europe, which is a clear vote of confidence in EU standards and our quality systems,” says Burke.
Interesting sub-trends
Within the overall infant formula market in China there are some very interesting sub-trends, such as the organic segment, grass-fed infant formula as well as infant formula made from A2 milk. However, one trend that goes largely unnoticed in this part of the world is the growing popularity among Chinese consumers of infant formula made from goat milk.
According to the Teno report, goat milk infant formula now accounts for 5% of all baby formula sales in China and is one of the fastest growing segments within the overall market. Sales of goat milk infant formula in China are growing at a rate of 30% per annum.
The market for goat milk infant formula in China has grown from Rmb 2bn (€260m) in 2012 to an estimated Rmb 7bn (€905m) in 2017. This bullish growth is set to continue, with China’s goat milk infant formula market forecast to grow to Rmb 10bn (€1.3bn) by 2020.
In volume terms, the market for goat milk infant formula in 2017 was estimated between 20,000t and 23,000t, meaning goat milk infant formula is valued between €40/kg to €45/kg.
“Over the past four years or so goat milk, A2 and organic infant ormula are gaining market share and the global players, including Nestle/Wyeth, Abbott, Mead Johnson and Danone are undoubtedly aware of these developments,” says Burke.
Despite the awareness of the big four, China’s market for goat milk infant formula is dominated by a handful of smaller players. Ausnutria, a Chinese dairy company listed on the Hong Kong stock exchange, has one of the largest market shares (circa 50%) in this segment with its Kabrita brand of goat milk infant formula produced in the Netherlands.
Other players include New Zealand’s Dairy Goat Co-operative, which produces goat milk infant formula under the Karihomme brand, and the Australian company Bubs, which sells its Bubs goat milk formula in China. The Chinese company, Feihe, also has plans to produce goat milk formula from its new €154m plant in Ontario, Canada.
Yashili, one of China’s largest domestic dairy companies, also has a goat milk infant brand called Doraler, which is canned and imported from Australia.
While China may look like one enormous market to many, there’s plenty of scope for companies to specialise in niche segments or categories, which are huge markets in themselves.
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