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The Role of Health Claims for Infant Milk Formula in Asia

11/5/2021
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The Role of Health Claims for Infant Milk Formula in Asia

Under the influence of the COVID-19 outbreak, parents were especially concerned about the health of their young children, and they spent more time studying claims of the additional functionalities of infant milk formula. Local and regional brands increased their influence through aggressive distribution and marketing, while global brands followed suit. These marketing efforts revolved around product claims and how their products could fortify infants’ immune system, improve cognitive abilities, etc. This study aims to examine how various positionings affect the pricing of products, as well as how brands can better position their product claims to maximise their competitiveness.

As Asia Pacific (APAC) is currently the largest market for infant milk formula, we have focused our scope on this region. The main source of data was Via, Euromonitor International’s global e-commerce product and price monitoring platform, which extracts millions of data points for standardised cross-comparison. The tool allows us to study the price behaviour of various product attributes. We have extracted the attribute and pricing information of 72,228 SKUs in the nine largest APAC markets (China, India, Indonesia, Hong Kong, Japan, South Korea, Singapore, Taiwan and Thailand), between January 2018 and July 2021. While studying the reasons behind the premiumisation trend in infant milk formula, we discovered the following:

  1. To many APAC consumers, probiotics are considered an essential ingredient. This attribute topped the number of available SKUs with health claims, which also sets up growth potential for products fortified with prebiotics. The chart below shows that even though probiotic products have a much higher median price per SKU than most other health claims, this claim also has the most SKUs available within the market.

imageoado1.pngSource: Euromonitor International’s Via pricing intelligence tracker

  1. While most products claimed that they would boost brain/cognitive health and bone health and would be expected to have a more premium positioning, the prices of these products stayed around the median price for the category. By contrast, products advertised as boosting the immune system, ensuring digestive health and boosting energy were priced considerably higher than other products.

imagefhyyf.pngSource: Euromonitor Via pricing intelligence tracker

  1. Geographic origin claims are especially important in China; labelling the product’s origin helps to reinforce transparency. The Netherlands, Australia and New Zealand were origins that consumers trusted, giving them leverage to be premiumised. Consumers believe that these countries have better milk sources, in turn leading to trust in the higher quality of the infant milk formula produced by these countries.

imagecmfyt.pngSource: Euromonitor International’s Via pricing intelligence tracker

In conclusion, the health claims, fortification features, as well as origin claims of products play a significant role in pricing. Manufacturers are fully aware of this and use these product claims as a way to adjust their pricing and the positioning of their milk formula products.

For more information on the interaction between product offerings and pricing, read the report: How Health Claims Impact the Price of Infant Milk Formula in Asia Pacific.

 

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