In 2021, China's domestic infant formula production was 694 thousand tons, with 16% year-on-year growth rate1. That was the first time that the infant formula production has reached positive growth rate since 2019.
According to China Customs Statistics, China imported 261.66 thousand tons of infant formula products in 2021, totaling 27.97 billion yuan. From January to the end of Aug 2022, the importation of infant formula was 172.15 thousand tons. Turning to half-year performance perspective, the import volume for Jan to June 2021 and 2022 were 128.69 thousand tons and 123.83 thousand tons, respectively. As for the import value, the total import value was 13.61 billion yuan in January to June 2021 and 13.31 billion yuan in January to June 2022, with a -2.2% year-on-year growth rate.
Disclosed by Euromonitor, in 2021, China's infant formula consumption scale reached 955.4 thousand tons, totaling 129.7 billion yuan. The estimation for 2022 was 901.5 thousand tons and 137 billion yuan.
Notes: The spike in 2017 was due to the new “second child” policy implemented in 2016. The policy allows people to have a second child but seems have not become an impetus for younger generation to have babies and the birth rate kept declining. Thus, in the next several years, the market volume kept declining.
The changing of the childbearing concept brings the average cost of infant formula higher. As marriage and childbearing attitudes of China's younger generation have changed, the natural population growth rate kept declining and was approaching zero in 2021. Besides, the infant formula market volume decreased in the past four years.
Despite the sales decline in tons, the overall market size is still increasing, as shown in the table above. That is mainly driven by the increasing tendency of consumers to purchase high-end products. China Dairy Industry Association estimated that the Chinese infant formula market size would approach 189.73 billion yuan in 20262.
Turn to import and domestic brands. Chinese domestic brands took over 50% market share in 2019. After the incident of dairy products contamination in 2008, Chinese brands kept losing market share. With the release of the new GB standard and other measures which revitalized the dairy industry, Chinese brands took more and more market share. In 2019, Chinese domestic brands took over 50% of the market share in China.
Separated by milk species, the infant formula market can be distinguished as goat formula and cow formula products. In recent years, the average growth of goat formula was over 25%4, which indicates that goat formula consumption has become a new trend. Based on data from Forward-looking Economist, the Compound Annual Growth Rate (CAGR) of goat infant formula was approaching 9%5.
The main sales channels in the market are offline channels such as infant stores and retail stores. In the context of COVID-19, online infant consumption has continued to grow. It was estimated that the proportion of the online consumption market would reach 26% by 20232.