New research from Mintel predicts that the market volume of infant milk formula in China will grow by a CAGR of 5.4% between 2016 and 2021, with organic products at the forefront of the growth.
At present, 75% of Chinese mums feed their babies organic infant milk formula.
Younger mums in particular are interested in organic formula options, with 79% of those aged 25-34 using the product.
China’s new middle class, what Mintel calls ‘Mintropolitans’, also over-index on organic infant milk formula usage, with 89% saying that they use these products – a significantly higher proportion than consumers overall (72%).
The reseach also finds that half of mums (49%) say they choose organic infant milk formula because they are “willing to pay more for their baby’s food”. This is also the main driver for them to choose niche products, such as goat milk formula (41%).
However, liquid formulas have yet to gain awareness in the Chinese market, despite its popular reputation in the West. Research from shows that the UK and 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 launched in China.
Great potential
Cheryl Ni, food and drink analyst at Mintel said: “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. Premium infant milk formula products will become the focus of leading companies who meet infant formula registration measures.
“Brands need to identify the right way to communicate with mums, to probe into their needs in real life, and to provide them with solid proof of the product advantages.”
Mintel research reveals that 65% of surveyed mums claim they have used formula from foreign brands in the last six months compared to one third (33%) who have used from local brands.
However, brand selection changes when considering the number of children in the household, in light of China’s two-child policy. Chinese brands are more popular among mums who have two or more babies (44% compared to 33% overall) and the penetration of foreign brands climbs to 70% among those who do not plan to have a second child.
Tighter rules
Meanwhile, consumers preferences seem to differ across China when it comes to foreign and local brands. In general, foreign brands have gained more fans in Shanghai (71%) and Guangzhou (76%), while only 37% of consumers in Beijing prefer to purchase local brands.
Tighter regulations coming into force will limit the number of local brands on the market, with companies restricted to retailing only a small number of product lines. It is believed this, along with stricter registration and labelling laws, will boost the repuatation of the sector.
Regarding the milk source, more than half (57%) of Chinese mums think products from Australia or New Zealand are better than those from other milk sources. One third of mums believe China and Northern Europe (32% for both) to be good sources of fresh milk, while just 28% believe the same to be true of North America.
Ninety per cent of Chinese mums breastfeed their children under the age of six months, but most then switch to formula when their babies are between six and 12 months. The proportion of mums who use formula more than once a day rises to 71% from 47% during this crucial period.