China’s infant and child nutrition market confirms the appeal of foreign brands for new parents

China has a fertility crisis. The country’s birth rate has been declining since 1987, with rates falling steeply since 2016 when 18.8 million babies were born. Last year saw the lowest number of babies since records began in 1949 at 9.6 million. This hasn’t been helped by the shrinking number of couples getting married – peaking in 2013 at 13.5 million - to follow a similarly-steep decline to 6.8 million last year.

Despite a multitude of new policies and incentives from Beijing and local governments to encourage more births and marriages, many Chinese consumers think raising kids is too expensive, too stressful, too competitive, isn’t worth coupling up for, and a lot harder than just getting a pet, which has seen ownership soar at inverse rates to baby making.

Despite the doom and gloom around China’s birth rates, the 9.6 million births in China last year is still higher than the entire population of the United Arab Emirates, Israel or Switzerland.

In addition, many of those couples making the conscious decision to have babies, are ensuring that they give their child the best possible start to life that they can. This includes buying them the safest, most effective products to make that happen. This is clear when we look at sales of infant and child nutritional supplements. Despite birth rates dropping 10% last year, the total sales value increased 33.9% over the past 3 months, from a year ago, based on ecommerce sales data from China Skinny’s Supplements Tracker.

That is particularly great news for foreign brands, who account for 91.5% of market revenue in the category - notably higher than the supplements category as a whole, where foreign brands account for 68.1% overall. The dominance of foreign brands reflects that most parents of the almost 10 million babies born last year still trust foreign brands more than local products. It is also reflective of more maturity with foreign brands.

The preference for foreign brands isn’t just confined to one or two countries, Chinese are open to reputable brands from across the globe. The top-5 selling infant and child nutritional brands are all from different countries, with Germany, Australia, France, New Zealand and Canada represented.

Although domestic brands are chipping away at market share, many still have foreign elements, such as the top selling domestic infant and child nutritional supplement which leans heavily on its key imported ingredient.

Analysing the category data provides some interesting insights that span food and beverage, beauty, health, petfood and other categories. One notable observation is that

Chinese consumers are incredibly ingredients-savvy and most products on the market are led by their key active ingredient or ingredients. Ingredients like DHA, probiotics and seaweed oil are the current cash cows - able to command much higher premiums than well-established market players like calcium and zinc.  

Chinese parents don’t just take ingredients at their face value. Consideration is given to purity, concentration, source, rate and ease of absorption etc. which is often guided by content they have seen online. Innovations in ingredients and how they are paired also attracts sales.

Like in many categories, there has been a noticeable shift towards more natural products or sources. Although much of their premium has been eroded away, sales have quadrupled over the past year.

 For brands selling infant and child nutrition products, or those wanting valuable lessons they can apply to their category, we’ve compiled a China Infant & Child Nutrition Report, incorporating many ecommerce and social media insights from our Supplements Tracker. It provides a feast of value insights and takeaways which can help direct strategies for the year ahead. You can purchase it here.

 Next year is a Dragon Year, which could see a bit of a bump in births, historically around 10-20%, so understanding the current market is particularly important right now.

 For other foreign brands, the overwhelming appeal of imported infant and child nutrition brands should illustrate that there remains plenty of categories in China where foreign brands still have an edge, particularly those who market their products well. Please contact us for assistance in doing just that. We hope you enjoy this week’s Skinny.