Several foreign infant formula brands see strong growth in China in 2024, reflecting new market opportunities

A number of foreign infant formula brands saw strong growth in the Chinese market in 2024, with some recording double-digit growth.

Chinese industry experts attributed the growth to foreign brands' efforts in rolling out new products in the high-end segment to cater to the diversifying needs of Chinese consumers as well as an uptick in the number of newborn babies in 2024 - those born in a Year of the Dragon in the Chinese zodiac.

Global food and beverage company Danone reported sales growth of 8 percent year-on-year to 3.69 billion euros ($3.87 billion) for the China, North Asia, and Oceania region, as the company released its financial reports for the fiscal year 2024 on Wednesday (European time).

The company noted its infant milk formula had continued to gain further market share, according to its financial report.

Netherlands-based dairy products maker Royal FrieslandCampina also reported strong growth in China. In its financial report published on February 18, the company said Asia achieved excellent operating profits in 2024, driven by Friso infant nutrition in China and consumer products in Southeast Asia.

Nestle, which released its financial report in February, noted that in "Zone Greater China," growth was underpinned by positive real internal growth delivery in every quarter despite soft consumer demand and intense price competition in several categories. This performance was achieved by driving faster innovation in key categories and adapting route-to-market and channel strategies to capture new growth opportunities.

Nestle reported a 1.9 percent annual growth in Greater China in local currency terms in 2024, per its financial statement.

New Zealand-based a2 Milk Co posted 10.1 percent year-on-year growth for the second half of 2024, with strong gains in China and other parts of the Asia region, its financial report showed on February 17.

The improved performance of foreign infant formula brands came after a four-year lull in the industry, according to domestic financial news portal yicai.com.

Zhu Danpeng, a veteran food industry analyst, told the Global Times on Thursday that generally speaking, foreign infant formula brands saw growthin 2024 as their strategy to roll out high-end products that cater to the specific needs of Chinese consumers worked.

"The year has seen multiple foreign brands recording positive results after they readjusted their China strategy to suit consumers' upgraded consumption pattern, breaking a lull that lasted for three to four years," Zhu said.

Although many Chinese are more cautious about marriage, married couples are more serious about lifting their living standards by pursuing high-end products. Foreign companies have banked on their research and development strengths to roll out products to fit consumers' changing tastes. The same can be said for leading Chinese brands, said Zhu.

"More babies were born in the Year of Dragon, that also helps," Zhu said.

China's newborns rose in 2024 for the first time in years. The country recorded 9.54 million newborns, a year-on-year increase of 520,000 compared with 2023, data from the National Bureau of Statistics showed in January.

The reversal in the fortunes of foreign infant formula brands also rebuts foreign media outlets' reports that China's infant formula market is dwindling amid an overall demographic change and falling birth rates, according to Li Changan, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics.

Li told the Global Times on Thursday that while China's demographic change will indeed affect the business of foreign infant formula brands, it is an oversimplification to identify it as the cause of their weak performance in past years.

"China's aging process is a gradual one, and the number of China's middle-class households and high-income groups are actually growing, and foreign formula makers' weak performance was due to a wide range of reasons, particularly with the rise of China's homegrown infant formula makers," said Li.

Sales of infant formula and diapers saw a marked rebound beginning from the third quarter of 2024, according to a research paper NielsenIQ sent to the Global Times on Thursday.

The market share of premium infant formula in China expanded to 37 percent from the 2023 level of 32.8 percent, in an apparent drive toward consumption upgrades, according to NielsenIQ data.

"The rebound in 2024 demonstrated that if foreign brands can effectively differentiate their products, and adapt their sales channels to the needs of Chinese consumers, they can still find the vast Chinese market as the top driver of their global growth," Li said.