BEIJING: A regulatory change to China's domestic infant formula sector could wipe out up to 80% of locally produced brands, opening up huge opportunities for international brands in China's intensely competitive early childhood demographic.
Under new ingredient regulations, reported by Asia Food Journal, the number of Chinese infant formula brands is anticipated to fall from more than 2,000 to just 400. International infant formula brands will be left unscathed by the changes, which only apply to products made in China.
The new regulations also require all producers to sell nationwide, which is likely to hit China's smaller regional brands.
Looser government policy on the number of children per family has been projected to deliver China an additional one million babies each year. China's baby and child-specific products category continues to record double-digit growth, mainly due to the sheer number of newborns and rising purchasing power among Chinese consumers, Euromonitor reported earlier this year.
For Chinese mothers, infant nutrition is a hot topic. A recent study by Ogilvy & Mather and Kantar Media CIC found that around half of articles on WeChat discussing motherhood issues contained content about infant nutrition for different life stages.
International baby brands are already marketing to inland China, where the number of wealthy consumers is booming. Increased connectivity outside of Tier 1 cities is also offering Chinese mothers knowledge of and access to international products via e-commerce sites. The regulatory change is likely to give international brands a further advantage.
International baby and child brands already have the upper hand with Chinese mothers. The Ogilvy & Mather study noted that Heinz, Gerber and Nestlé were the most mentioned infant nutrition brands in articles posted by media and key online influencer WeChat accounts.
For European dairy exporter Danone, a smart approach to programmatic buying and ecommerce in China helped to establish its Nutrilon infant milk product within six months of its launch in March 2013.
Data sourced from Asia Food Journal, Euromonitor; additional content by Warc staff