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Market Research Report

Infant Milk Formula - China - April 2016

Published by Mintel China Product code 335227
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Infant Milk Formula - China - April 2016
Published: April 30, 2016 Content info:
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"Faced with upcoming tougher regulations and increasingly intense market competition, companies and brands need to find new approaches to communicate with consumers as well as drive sales. IMF (Infant Milk Formula) products which are easier to absorb and similar to breast milk are more likely to win in the China market. Besides, given that Chinese mums have limited knowledge about IMF ingredients, companies and brands need to invest more in market education."


- Yujing Li, Senior Research Analyst

This report looks at the following areas:

  • Have IMF products been over-marketed in China?
  • How to promote organic IMF products to Chinese consumers?
  • "Mimic breast milk" is a future trend for IMF products

The IMF (Infant Milk Formula) industry in China is going through changes. The upcoming tougher regulations will pose challenges for both international and domestic brands. Companies and brands need to find new approaches to communicate with consumers as well as sell products.

This Report provides analysis on the behaviour of current IMF product consumers. It goes into detail to understand which factors will drive consumers to purchase one product over another and what reasons will push consumers to switch products. In the meantime, Chinese mums' awareness towards IMF product ingredients and their functions are also investigated in this Report.

Table of Contents

Table of Contents

Overview

  • What you need to know
  • Products/ themes covered in this Report

Executive Summary

  • The Market
    • Figure 1: Total China retail volume sales of infant milk formula, 2010-20
    • Figure 2: Total China retail value sales of infant milk formula, 2010-20
  • Companies and Brands
    • Figure 3: Value share of leading companies in infant milk formula market, 2013-15
  • The Consumer
  • Mums show stronger preference for international brands
    • Figure 4: Purchased brands, January 2016
  • 34% of mums only buy one IMF brand
    • Figure 5: Repertoire analysis of purchased brands, January 2016
  • Mums like IMF products which are easier to absorb and similar to breast milk
    • Figure 6: Product preference, January 2016
  • Quality-related reasons are top drivers for product switch behaviour
    • Figure 7: Product switch, January 2016
  • Significant differences exist regarding ingredient awareness
    • Figure 8: Ingredient awareness, January 2016
  • More education is needed for Chinese mums
    • Figure 9: Ingredient function, January 2016
  • Health benefits and nutritional values are perceived as most attractive advantages of organic IMF products
    • Figure 10: Advantage of organic infant milk formula, January 2016
  • What we think

Issues and Insights

  • Have IMF products been over-marketed in China?
  • The facts
  • The implications
    • Figure 11: Selected product claims in the China IMF product launch, 2012-15
  • How to promote organic IMF products to Chinese consumers?
  • The facts
  • The implications
    • Figure 12: Organic infant milk formula launched by Plum, US, 2016
    • Figure 13: Organic infant milk formula launched by Modilac Bio, France, 2015
  • "Mimic breast milk" is a future trend for IMF products
  • The facts
  • The implications
    • Figure 14: Baby personal care product and infant milk formula which use "ingredients found in breast milk" as selling point, Thailand
  • and US, 2013-16
    • Figure 15: IMF product which emphasises OPO's benefits on its packaging, China, 2015

The Market - What You Need to Know

  • The value growth rate of IMF market keeps slowing down
  • The pending regulations may reshuffle the IMF industry

Market Size and Forecast

  • Market growth rate keeps slowing down
    • Figure 16: Total China retail market value of infant milk formula, 2010-15
  • Flat growth rate in the next five years
    • Figure 17: Total China retail volume sales of infant milk formula, 2010-20
    • Figure 18: Total China retail value sales of infant milk formula, 2010-20

Market Factors

  • The relaxation of the one-child policy and urbanisation save IMF market
  • Online retailing offers more choices for mums living in low tier cities
  • Negative news of IMF products destroys consumers' confidence
  • New import tax sets barrier for imported IMF products
  • The upcoming regulations will reshuffle the IMF industry

Key Players - What You Need to Know

  • International companies still lead the market
  • More players enter super-premium segment
  • OPO ingredient is ready to take off

Market Share

  • International companies still lead the market
    • Figure 19: Value share of leading companies in infant milk formula market, 2013-15

Competitive Strategies

  • Danone stops selling IMF products under Karicare brand in China
  • More players tap into super-premium segment
    • Figure 20: Super-premium product introduced by Yashili and Arla, 2016

Who's Innovating?

  • OPO ingredient is rising
    • Figure 21: Newly launched infant milk formula with the OPO ingredient, China, 2011-15
  • Nestlé promotes its BabyNes machine in China
  • New technologies may bring a revolution for IMF industry

The Consumer - What You Need to Know

  • 34% of mums only buy one IMF brand
  • Mums like IMF products which are easier to absorb and similar to breast milk
  • Quality-related reasons are key drivers for consumers' product switch behaviour
  • Consumers have limited knowledge about IMF ingredients
  • Health benefits and nutritional values are perceived as most attractive factors of organic IMF products

Purchased Brands

  • International brands tend to attract more consumers
    • Figure 22: Purchased brands, January 2016
  • A third of mums only buy one IMF brand
    • Figure 23: Repertoire analysis of purchased brands, January 2016
  • Mums with higher income and education background are more likely to purchase different brands

Product Preference

  • International brands tend to attract more consumers
    • Figure 22: Purchased brands, January 2016
  • A third of mums only buy one IMF brand
    • Figure 23: Repertoire analysis of purchased brands, January 2016
  • Mums with higher income and education background are more likely to purchase different brands

Product Preference

  • Mums show strong preference for products which are easier to absorb and similar to breast milk
    • Figure 24: Product preference, January 2016
  • International certifications win more trust
  • Appealing product features for high earners
    • Figure 25: Product preference, by household income, January 2016

Product Switch

  • Quality-related reasons are top drivers for product switch behaviour
    • Figure 26: Product switch, January 2016
  • Word of mouth matters
  • Multi-brand users are most likely to be influenced by word of mouth
    • Figure 27: Product switch, by repertoire of purchased brands, January 2016
  • Price has limited influence for consumers' product switch behaviour
  • Leverage free tasting to enter growing up milk segment
    • Figure 28: Product switch, by age of youngest baby, January 2016

Ingredient Awareness

  • Significant differences exist regarding ingredient knowledge
    • Figure 29: Ingredient awareness, January 2016
  • Older mums have better knowledge about ingredients
    • Figure 30: Mums who have not heard of selected ingredients, by age, January 2016
  • Mums' knowledge changes with babies' age
    • Figure 31: Mums who have heard of selected ingredients and know about their functions, by age of youngest baby, January 2016

Ingredient Function

  • Chinese mums need more education about ingredient benefits
    • Figure 32: Ingredient function, January 2016
    • Figure 33: Newly launched infant milk formula with selected ingredients, China, 2011-15
  • Highlight ingredient benefits depending on mum's actual needs
    • Figure 34: Ingredient function, by age of youngest baby, January 2016

Advantage of Organic Infant Milk Formula

  • Health benefits and nutritional values are perceived as the most attractive product advantages
    • Figure 35: Advantage of organic infant milk formula, January 2016
  • Organic claim gives safety assurance
  • High earners believe that organic products are more premium

Appendix - Market Size and Forecast

  • Figure 36: Retail value sales of infant milk formula, 2010-20
  • Figure 37: Retail volume sales of infant milk formula, 2010-20

Appendix - Methodology and Definitions

  • Methodology
  • Fan chart forecast
  • Abbreviations
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