Suki Wu, Market Specialist, Shanghai Office, Bord Bia – The Irish Food Board
Milk powder used to be the main category for maternal stores to attract consumers and gain profit and however, with the rapid change of market environment, the unit price of milk powder is getting higher and higher, and the decline of gross profit has become an irreversible trend.
According to the data from Sina maternal and child research institute, supplementary food items have a gross profit of up to 36.9% and a higher market price than standard as a non-standard product, which can effectively improve the profitability of maternal stores. Especially with the improvement of living standards, the change of consumption concept and the introduction of the national nutrition plan, China's infant supplementary food industry has gradually entered a period of rapid development.
2018 is the first year for supplementary food industry development in China. To promote the development and upgrading of supplementary food industry for infants, the central government has issued a number of policies and regulations to strengthen the guidance and management of supplementary food production and supplementary food enterprises. With the implementation of the new audit management regulations, the threshold of the industry has been raised, the supplementary food nutrition industry has undergone a major reshuffle, and the total number of brands has decreased.
Based on the consumption report from CBNData, it shows that infant nutrition sales rose slightly from 2016 to 2018, but grow fast from 2017 to 2018. In 2017 and 2018, the top 1% of nutrition supplement brands contributed more than 60% of sales, and the top 5% brands contributed about 80% of sales.
The imported infant nutritional products contributed more than 70% sales of the market share, and the sales of vitamins almost all come from imported brands. The greatest demand for calcium, iron and zinc comes from children aged 6-9 who are growing fast; DHA/ walnut oil and probiotics, that are specifically designed to address problems in baby's brain development and digestive system, are valued by parents even before their baby is 6 months old.
The infant nutrition consumption accounting for almost 64% for infant aged 0-3 months; supplementary food is the main consumption for children from 3 to 12 months. After 1-2 years old and 2-3 years old, nutrition products come back to be the main food consumption again that accounting for as much as 66%. This indicates that infant nutrition food and complementary food is between one side and the other.
In 2018, Tmall accounted for more than 50% for the total sales of e-commerce supplementary food and nutrition products. The sales of infant nutrition products increased year by year, from less than 50% in 2016 to more than 50% in 2018. However the sales of baby snacks is declining year by year.
In general, strong promotional activities and subsidies provided by the e-commerce platform or brands will quickly boost sales, and currently nutrition products are still in the price-driven stage, and it will take some time to truly become brand/quality-driven industry.
Suki Wu, BordBia Shanghai office
Resource：CBNData