The two-child policy in the country helped to increase the number of new-born babies in 2016 and 2017, which drove retail volume growth in milk formula until 2019. However the number of births has decreased ever since; for instance falling from 14.
To address falling sales of milk formula, many brands have launched growing-up milk formula for older children, such as Firmus, Jun Le Bao, Nutricia (Danone) and Yili. Most of these new products are targeted towards children aged three to six, and some even up to age seven, targeting pre-school children.
In March 2021, a new national standard for milk formula was issued by the National Health Commission. It has more explicit and strict provisions on protein, carbohydrate and trace elements, and optional ingredients.
After suffering milk formula scandals in the past, health and safety and building consumer trust are key to growing sales in milk formula. The strict milk formula registration policy effective from 2017 eliminated many small brands from the market which did not meet the requirements for registration.
One strategy for growth in baby food is to add value through offering consumers something different. Organic milk formula is one area which has received growing attention at the end of the review period, and which could continue to gain favour amongst health-conscious parents in China.
In 2020, as part of its localisation strategy, Danone purchased a milk formula plant in based in Qingdao from the Canadian dairy company Saputo. It launched a new brand, Nuoyoneng 3 Yunhui, positioned in the mid-priced to premium segment.
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