How China is Ramping Up Demand for Infant Formula

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It’s hard to not talk about infant formula and China in one breath. Whether it’s the anticipated surge in demand owing to the revocation of one-child policy, or angry Australian parents criticising Chinese students for drying up products at supermarkets, China is at the centrestage of the future of the infant formula market.

China has stringently implemented the one-child policy since 1979 – a move that was aimed at slowing down the explosive population growth. However, as a sizeable percentage of Chinese population ages and the country races to become an economic and military powerhouse, the government reckons it needs a young workforce. And, from April this year, China will be moving to a two-child policy, a move expected to add nearly 1.5-2 million babies to the global population.

China’s neighbour India, too is projected to reach 1.5 billion in population in the next fifteen years. Demand for infant formula is expected to be strong in the country, as decades of economic growth has resulted into the emergence of a strong middle class, which has the means to make buying decision aimed at boosting health and well-being.

Growth will Also be Strong in Emerging Nations

 In addition to China and India, future growth for infant formula is expected to come from Brazil and Russia. “Demand for baby formula will be strong in BRIC nations, whereas demand in North America and Western Europe will remain low, but stable. Infant formula companies are already scrambling to broaden their base in BRIC, and a number of mergers and acquisitions are in the offing”, said Nandini Roy Choudhury, consultant at Future Market Insights (FMI).

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Along with high population growth rate, another factor that’s ramping up demand for infant formula in emerging nations is the urbanisation trend. People from villages are moving to cities in search of better lifestyle and job prospects. Exposure to city life is raising awareness on the importance of health and well-being. Smartphone ownership and social media usage is high among city dwellers, which further acts as a source of information and education for parents. These factors, in part, have helped in ramping up demand for infant formula in emerging nations.

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The key for infant formula manufacturers is to offer healthy products that compensate for the lack of breast milk. Multinational companies are investing a great deal in research to understand how the constituents of breast milk can be mimicked. Consumers are taking an active interest in reading online reviews before making a purchase, prompting both global and local brands to invest in online marketing of their products.

While China is expected to remain the largest market for infant formula in the future, Ireland is steadily gaining traction as one of the leading exporters to China, second only to Netherlands. New Zealand is another leading exporter of infant formula to China.

The demand for baby formula in China spiked after 54,000 babies had to be hospitalised after consuming milk and infant formula adulterated with melamine. The incident also led to the death of six infants, putting the domestic infant formula industry under the scanner. Since then, China has accounted for huge demand for baby formula products, and the status quo is not anticipated to change anytime in future.

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FMI

Future Market Insights is the premier provider of market intelligence and consulting services, serving clients in over 150 countries. FMI is headquartered in London, the global financial capital, and has delivery centres in the U.S. and India.