Child milk formula firms aim to meet parents' needs

China Feihe Ltd, a leading infant formula brand in China, announced on March 26 that it will roll out a subsidy program aimed at improving birth rates nationwide in early April. The program will offer expectant families subsidies of at least 1,500 yuan ($206.34).

The initiative is expected to be backed by a 1.2 billion yuan fund.

Unlike previous local policies that primarily address families with multiple children, Feihe's subsidies will be available nationwide. The comprehensive support will extend to families expecting their first child, as well as to those with two or more children.

"The cost of raising children remains a major concern for families, and we hope these subsidies will encourage more parents to expand their families," said Feihe.

The company is set to provide a suite of services alongside its financial incentives, including prenatal and postpartum consultations, breastfeeding support and expertled parenting courses.

Feihe's initiative aligns with broader policy trends in China, where several cities have recently introduced high-value subsidies to combat the ongoing decline in birth rates.

Cities such as Hohhot, Inner Mongolia autonomous region, have recently rolled out incentives, with one-child families in Hohhot receiving a one-time 10,000 yuan subsidy, while families with two or three children receive 50,000 yuan and 100,000 yuan, respectively, over five to 10 years.

In 2024, China's annual birth population increased for the first time since 2017, reaching 9.54 million. Much of this growth was driven by third-tier and lower-tier cities, where domestic infant formula brands, including Feihe, hold a dominant market share.

With Feihe's core sales concentrated in these regions, the company is well-positioned to capitalize on the rising demand for infant formula, particularly the market for stage-three formula, which is aimed at children over one year old, in light of the uptick in birth rates.

China's infant formula industry is also undergoing a regulatory shift. The national standard for infant formula, implemented in 2023 alongside the second formula registration system, has significantly raised market entry barriers.

Companies must now provide detailed data on production processes and nutritional components. As a result, some smaller domestic players lacking R&D capabilities have exited the market.

Global and domestic nutrition brands have been doubling down on China's evolving market landscape.

Global food giant Nestle's infant nutrition business in China reported high single-digit sales growth in 2024, with company executives citing expansion opportunities in infant and child nutrition, women's health and affordable nutrition solutions.

Meanwhile, Mead Johnson China recently launched Enfapower, a new sub-brand focused on precise nutrition for children aged three to 15.

"The second rapid growth period in a child's life requires targeted nutritional support, and we aim to meet the growing demand for refined parenting solutions," said Li Qiang, general manager of Mead Johnson China's new business division.

In 2024, Danone's sales revenue in China, North Asia and Oceania reached 3.69 billion euros ($3.98 billion), representing an 8 percent year-on-year increase. Within this region, the infant formula business continued to expand its market share amid the industry's recovery trend, while the medical nutrition business maintained strong growth momentum, according to its financial results of 2024.

During the performance meeting, Danone said that the Chinese infant milk powder industry is showing further signs of improvement, with Danone's market share experiencing significant growth and its high-end strategy yielding good results. Danone is highly satisfied with the performance of its premium brand Aptamil series, which was launched in the previous quarter and has contributed to the company's market share increase.

FrieslandCampina's 2024 financial report shows that Friso, its core infant formula brand, maintained double-digit growth in the Chinese market in 2024. This also drove an increase of 6 percent in the revenue of FrieslandCampina's specialized nutrition business group to 1.22 billion euros, with operating profits rising by 16.4 percent to 230 million euros.

Nestle China has said during previous interviews that its infant formula sector in China achieved high single-digit growth in 2024. Its infant nutrition sector, including Illuma of Wyeth and NAN brands, which previously experienced consecutive declines, returned to growth. The infant nutrition business became the largest contributor to the performance growth of the China region, according to Nestle China.

As leading brands ramp up investments and tailor products to China's shifting demographic and regulatory landscape, the country's infant and child nutrition market is entering a new phase of intensified competition and innovation.

According to iResearch, meticulous parenting has become the key force driving market expansion. The demand for functional nutritional products for children among modern parents is increasing, with refined functionality, professional formulation and quality becoming core demands.

Meticulous parenting is emerging as a new trend, with parents not only focusing on basic nutrition but also zeroing in on more detailed demands such as vision protection, immune system enhancement and bone development. Products in professional and high-quality niche segments are expected to see room for development.

According to predictions by Zero Power Intelligence Group, the children's milk powder market will continue to expand with consumption upgrades, with a projected compound annual growth rate of 9 percent from 2025 to 2030.

Dairy companies that have captured this market trend are driving the transformation and upgrading of nutritional products from "single-formula milk powder" to "precision nutrition for the entire life cycle" through technological innovation and channel restructuring.