Media Updates, page-15156

China’s Dairy Market: 2024 Review & 2025 Outlook

1. 2024 Market Overview

1.1 Birth Rate Recovery

•China’s birth rate increased for the first time in seven years, reaching 9.54 million births (+6% YoY).

•This growth is attributed to the Year of the Dragon effect and delayed births due to COVID-19.

•While this is a positive sign, the long-term sustainability of this trend remains uncertain.

1.2 Infant Formula Market Performance

•Sales declined by 7.4% YoY, but the rate of decline slowed by 2.4% compared to 2023 (AC Nielsen data).

•Industry-wide efforts to stabilize pricing and manage inventory are beginning to take effect.

•Leading brands showing growth: A2 Milk, Feihe, Yili, Danone, Royal Meisu.

1.3 Adult Milk Powder Growth

•The adult milk powder market grew by 3.3% YoY, continuing a steady upward trend.

•Increasing demand for functional nutrition (e.g., goat milk powder, lactoferrin, A2 protein) is driving growth.

1.4 Market Concentration & Profitability

•The top 10 dairy powder companies now control 87% of the market, up from previous years.

•Profitability trends:

•Domestic brands: 60% profitable.

•Foreign brands: Over 70% profitable, with A2 Milk, Danone, Nestlé, and Royal FrieslandCampina among the top performers.

•Growth segments: Goat milk formula (Ausnutria, Yeeper, Blue River), children’s nutrition (Nestlé, Yili, Mengniu, Shengyuan).

1.5 Cross-Border E-Commerce (CBEC) Surge

•CBEC infant formula sales exceeded ¥20 billion in 2024, growing 30%+ YoY.

•Key beneficiaries: Danone, Royal FrieslandCampina, A2 Milk.

•Advantages of CBEC:

•Bypasses China’s strict domestic regulatory framework.

•Allows brands to maintain premium pricing strategies.

•Supported by Chinese government policies promoting cross-border trade.

1.6 Digital Transformation & Direct Sales

•Brands are increasingly shifting towards direct-to-consumer (DTC) models, reducing reliance on traditional distribution.

•Key strategies:

•Price control & inventory management through data tracking.

•Enhanced consumer loyalty via targeted digital marketing.

•Integration of online & offline retail channels for greater efficiency.

2. 2025 Market Forecast & Key Trends

2.1 Infant Formula Market Stabilization & Growth

•Expected 3-5% YoY growth in 2025, assuming the birth rate remains around 9 million.

•Price stability and inventory control will be critical for profitability.

•Brands need to focus on premiumization and strengthening core product lines.

2.2 Adult Milk Powder Industry Shake-Up

•New national standards (effective Feb 2025) will reshape the adult milk powder sector.

•Anticipated short-term market disruption due to product reformulations and regulatory compliance.

•Growth areas:

•Functional formulas (lactoferrin, A2 protein, probiotics).

•Medical & senior nutrition segments.

•Companies must educate consumers about product benefits and strengthen branding to maintain market share.

2.3 Retail & Distribution Changes

•Offline mother & baby stores are consolidating, increasing their bargaining power.

•Expansion of private-label milk powders, but these face slow sales without strong branding.

•Infant formula retailers diversifying into adult nutrition to offset declining birth rates.

2.4 Cross-Border & Premium Segments Expansion

•A2 Milk is well-positioned to benefit from:

•High-end infant formula demand.

•Cross-border e-commerce growth.

•Adult functional dairy products, particularly in China’s evolving regulatory environment.

3. Implications for A2 Milk

3.1 Infant Formula Outlook

•Market stabilization in 2025 could support a modest recovery in A2 Milk’s China sales.

•Pricing discipline and inventory control will be critical for profitability.

•Brand investment remains essential to maintain consumer trust and premium positioning.

3.2 Growth in Functional Dairy & Adult Nutrition

•China’s regulatory shift in 2025 presents an opportunity for A2 Milk to expand in functional adult dairy.

•Key focus areas:

•A2 protein-based adult milk powders.

•Lactoferrin-enriched products.

•Medical nutrition formulas for seniors and health-conscious consumers.

3.3 Strengthening Cross-Border & Digital Channels

•CBEC remains a key revenue driver; A2 Milk should continue leveraging its strength in this channel.

•Expanding direct-to-consumer and digital marketing will enhance pricing power and customer loyalty.

•Investment in data analytics can further optimize supply chain efficiency and inventory control.

4. Conclusion: Cautious Optimism for A2 Milk in 2025

While structural challenges remain in China’s dairy sector, A2 Milk has several tailwindssupporting its growth:

1.Infant formula market stabilization, with potential for modest recovery in 2025.

2.Expansion of premium adult dairy amid regulatory shifts.

3.Strong cross-border sales, supported by government trade policies.

4.Strategic advantage in functional dairy, aligning with China’s evolving nutritional trends.

5.Accelerating digital transformation, improving pricing control and consumer engagement.

To maximize these opportunities, A2 Milk must remain agile, focusing on innovation, supply chain control, and premium positioning in China’s evolving dairy market.

https://mp.weixin.qq.com/s/xfOqdiXKcY26gN6ZBG0yKg