Daxue consulting slideshare_infantformula

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© 2016 DAXUE CONSULTING
ALL RIGHTS RESERVED
“Demand for
infant formula
in China “
MARCH, 2016

TABLE OF CONTENTS
1.0 CHINESE BABY FEEDING PATTERNS
• CHINESE BABY FEEDING PATTERNS IN
COMPARISON TO THE RECOMMENDED DIET
• CHINESE MARKET IS A MAJOR STAKE FOR
INTERNATIONAL BRANDS
2.0 SOCIAL MEDIA PLATFORM INFLUENCE
• TOP BRANDS FAVORED BY CHINESE
CONSUMERS
• REPUTATION ON SOCIAL MEDIA INFLUENCES
BRAND IMAGE AMONG CHINESE CONSUMERS
3.0 IMPORTED BRANDS SCANDALS
• CASE STUDY: FONTERRA CONTAMINATION
INCIDENT AFFECTED ITS RELATED BRAND
REPUTATION IN CHINA
4.0 DECREASE IN BIRTH RATES IN CHINA
• CONTINUES DECREASE IN BIRTH RATE
• DIRECTLY AFFECTING DEMAND FOR INFANT
FORMULA IN CHINA

How are babies fed in China?
0 Month 12 Month 18 Month6 Month 24 Month 30 Month 3 Years Old
Recommended
by World Health
Organization
Chinese
feeding
pattern
Homemade baby food
supplements
Baby food supplements
Infant formula Adult food
Breastfeeding

Chinese market is a major stake for international brands
World Health Organization (世界卫生组织)
recommendations:
• Infants (newborn to six months) should
primary be breastfed
• Toddlers (six months to three years old)
should consume baby food supplements
Chinese feeding patterns:
• Infants (newborn to six months) consume
a combinationof breastfeeding and infant
formula
• Toddlers (six months to three years old)
consume a combination of infant formula
and homemade baby food supplements
• Chinese kids usually begin to consume
adult food from the age of three
These feeding patterns make Chinese
parents a major target for brands. Thus
enteringandexpandingthemarketforinfant
formula in China is on the top of the to-do
list of many infant formula manufacturers.
The market for infant formula in China
is currently larger than ¥60 billion and
gradually growing. Many infant formula
companies are aiming for a share of this
large consumer market.

Wyeth 惠氏奶粉
Abbott 雅培奶粉
Firmus 飞鹤奶粉
Karicare 可瑞康奶粉
BeingMate 贝英美奶粉
Nestle 雀巢奶粉
Dumex 多美滋奶粉
Nutrilon 诺优能奶粉
Friso 美素佳儿奶粉
Yili 伊利奶粉
China
China
China
USA
USA
Holland
Holland
France
Switzerland
New Zealand
2.
9.
8.
5.
7.
6.
4.
3.
10.
Top ten brands of infant formula favored by Chinese consumers

Geographic location of top ten brands of infant formula favored by Chinese
• Recent statistics show that Tencent QQ
and Wechat (In Chinese 腾讯QQ与微信)
haveoversixhundredmillionactiveusers.
Weibo (In Chinese 新浪微博) have over
two hundred million active users
• In order to perform well in the consumer
market in China, online channels are
crucial for both domestic and international
brands
• Bad operations by companies will be
relayed and commented on social media
platforms, hence, deeply modify Chinese
consumers’ purchase habits

Attractiveness of imported brands threatened by scandals
• Fonterra (In Chinese 恒天然): One of the
world’slargestproducersofdairyproducts
• The 2013 Fonterra contamination incident
dramatically hurt the image of its product
segment
• In 2012, the year before Fonterra’s
contamination incident, a large part of
China’s US$1.9 billion import formula
milk originated from New Zealand
• Incident like this dramatically disturbed
the image among Chinese consumers
and decreased their confidence towards
related products
Case Study

Attractiveness of imported brands threatened by scandals
• A survey was conducted on one
of the most popular social media
platform in China, Sina Weibo (In
Chinese 新浪微博) in relation to the
consumer confidence after the incident
• Out of the 43,000 respondents, almost
80% of the respondents indicated they
would not purchase the affected products
after the incident
• This indeed affects the import of New
Zealand infant formula in 2014 with a
decrease of over 30% in import quantity
in comparison to the year before
Case Study

Suspect decreasing demand for the market of infant formula in China
• This is closely linked with the number of
newborns in China.
• Accordingtosomeexperts,thisrelaxation
should enable 10 million incremental
births by 2018.
• But on the contrary, the newborn
populationhasneverexcessed180million
since 1992.
• In the recent ten years, the newborn
population has changed between 150 to
160 million each year and the expected
“baby boom” around 2010 never hit.
With the aging population, the Chinese
government is pushing for an increase
in birth rate which led to the scrap of the
30+ year policy. However, the result of the
previous attempt to relax the “One Child”
policy for parents who are a single child (In
Chinese 单独二孩政策), did not perform
well. This relaxation was applied over two
years, but results have been disappointing.
Up until 2015, China has over 110 million
couples who fits the relaxation criteria,
however, only 16.9 million couple applied,
i.e. around 15%. The newborns in China in
2015 is 165.5 million.
Birth Rate of China

Indeed, many factors point to the fact
that China’s birth rate is not increasing.
Therefore, it is realistic to not be too
optimistic about the result of the new policy
“Universal Two-Child Policy” (In Chinese
全面二孩政策). With suspected decrease
in birth rate in China, it is still wise to expect
a decrease in demand for the market for
infant formula in China. Clearly, China has
an overall population advantage over most
of the other countries and the demand
is a lot more than those countries, but in
comparison to the past years, the domestic
demand for infant formula is expected
to decrease.
Suspect decreasing demand for the market of infant formula in China

• Chinese baby’s feeding patterns make
the market for infant formula in China a
prosperous market
• Online appearance is crucial for domestic
and foreign brands, both heavily influence
the purchasing behaviour of Chinese
consumers
• Suspected decrease in birth rate in China
over the next few years hence will lead
to a decrease in the demand for infant
formula
Key Points:

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© 2016 DAXUE CONSULTING
ALL RIGHTS RESERVED
CONTACT US
HONG KONG | BEIJING | SHANGHAI
www.daxueconsulting.com
dx@daxueconsulting.com
+86 (21) 5386 0380
+86 134 6658 3902
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No copyrighted materials may be reproduced,
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contact us.

Daxue consulting slideshare_infantformula

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