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Dairy companies pivot on adult nutrition amid China's low birth rate, market saturation
(MENAFN) China's once booming dairy market is undergoing a significant transformation as companies adapt to a shrinking birth rate and heightened competition. Traditionally one of the largest milk markets globally, China is now seeing a shift in focus from infant to adult nutrition due to demographic changes and market saturation. A2 Milk, a New Zealand-based company, recently introduced new powdered milk products targeting adults and the elderly in China. This move aligns with similar strategies by international and local dairy brands, including Danone, Abbott, Fonterra, Nestle, Yili, and Faihi. The emphasis on adult nutrition reflects a growing interest in catering to elderly and sports nutrition needs, creating new consumption opportunities in a market that is increasingly oversupplied and under-demanded.
China's demographic trends are contributing to this shift. Official data reveals that the country's birth rate fell to a record low of 6.4 births per 1,000 people in 2023, while the population ages rapidly. This demographic shift is poised to alter the economy and consumer markets significantly. Rabobank projects a 2.4 percent annual growth in dairy demand in China through 2032, though infant formula is expected to face "negative volume growth" due to market saturation and fierce competition. Analyst Michelle Huang highlighted that the infant formula sector is particularly crowded, suggesting that dairy companies are diversifying into adult and medical nutrition as a strategy for growth.
Historically, foreign companies played a dominant role in China's dairy market, particularly after the 2008 Sanlu milk scandal, which led to a major public health crisis and diminished trust in domestic products. However, the landscape is evolving as local dairy producers increase their output and the government pushes for greater self-sufficiency and stricter regulation, particularly in the infant formula sector. As a result, the once-dominant foreign players are now competing in a more saturated and regulated market, prompting a strategic shift towards new growth areas within the adult nutrition sector.
China's demographic trends are contributing to this shift. Official data reveals that the country's birth rate fell to a record low of 6.4 births per 1,000 people in 2023, while the population ages rapidly. This demographic shift is poised to alter the economy and consumer markets significantly. Rabobank projects a 2.4 percent annual growth in dairy demand in China through 2032, though infant formula is expected to face "negative volume growth" due to market saturation and fierce competition. Analyst Michelle Huang highlighted that the infant formula sector is particularly crowded, suggesting that dairy companies are diversifying into adult and medical nutrition as a strategy for growth.
Historically, foreign companies played a dominant role in China's dairy market, particularly after the 2008 Sanlu milk scandal, which led to a major public health crisis and diminished trust in domestic products. However, the landscape is evolving as local dairy producers increase their output and the government pushes for greater self-sufficiency and stricter regulation, particularly in the infant formula sector. As a result, the once-dominant foreign players are now competing in a more saturated and regulated market, prompting a strategic shift towards new growth areas within the adult nutrition sector.
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