news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

The domestic milk powder business is becoming increasingly difficult, and foreign-funded small and medium-sized milk powder brands are also struggling. With the recent announcement of semi-annual reports by mainstream foreign-funded dairy companies such as Nestle (NESN.SIX), Danone (BN:PA), and FrieslandCampina, the milk powder business of leading foreign-funded companies is outperforming the industry trend. However, according to customs data, the import volume and value of infant formula in the first half of this year both fell sharply by double digits.

Judging from the financial reports, the leading foreign-funded dairy companies are not having as hard a time in China as their domestic counterparts.

According to Danone Group's financial report, Danone Group achieved revenue of 13.76 billion euros in the first half of the year, a year-on-year increase of 4%. Among them, sales in China, North Asia and Oceania where China is located were 1.84 billion euros, a year-on-year increase of 8.4%. Among them, due to the continued growth of early life nutrition products and medical nutrition products in the Chinese market, Danone's professional special nutrition business also drove revenue of 4.41 billion euros in the first half of the year, a year-on-year increase of 4.3%.

FrieslandCampina's semi-annual report shows that as the business of infant formula brand Friso maintained double-digit growth in the Chinese market, FrieslandCampina's Professional Nutrition business group's revenue increased by 4.8% to 610 million euros in the first half of the year.

Nestlé's semiannual report shows that Nestlé China achieved revenue of 2.44 billion Swiss francs, a year-on-year increase of 1.6%. The instant coffee, pet food, candy and infant nutrition businesses achieved market share growth. The revenue of the infant nutrition business showed negative growth, but the performance was still better than the overall level of the industry.

However, the reporter noticed that although the milk powder business of leading foreign-funded dairy companies mostly maintained growth, the industry's import data further declined.

Customs data show that in the first half of 2024, China imported 1.308 million tons of various dairy products, a year-on-year decrease of 15.6%, and the import value was 5.44 billion yuan, a year-on-year decrease of 22.4%. The main imported dairy product categories have declined to varying degrees, and the most obvious decline is infant formula milk powder, with imports of 93,000 tons in the first half of the year, a year-on-year decrease of 33.8%, and import value of 1.81 billion yuan, a year-on-year decrease of 29.5%. Statistics show that the import volume of infant formula powder from 2019 to the first half of 2023 was 166,000 tons, 164,000 tons, 129,000 tons, 124,000 tons, and 141,000 tons, respectively. The import volume of infant formula powder in the first half of 2024 is also a new low in recent years.

Such a difference surprised the market. According to incomplete statistics, as of the end of July, a total of 409 series of infant formula products from 93 dairy companies had passed the secondary registration, of which about 20% were from overseas factories.

Independent dairy analyst Song Liang told China Business News that the current imported infant formula market is also severely divided. The companies with better growth are mainly the leading ones such as Danone, FrieslandCampina, and Nestlé. However, the domestic market performance of small and medium-sized imported milk powder brands is also not ideal. They are still digesting inventory or controlling quantity to stabilize prices, so the import volume has also seen a large decline.

However, in Song Liang's opinion, in the short term, both domestic and imported infant formula milk powder are showing a trend of rapid concentration, but the market will not be concentrated to only a few companies. In addition to the industry's self-adjustment, the current market concentration is also due to the fact that leading companies are competing for the market with low prices and large volumes, but this move is difficult to maintain in the long run. As market profits recover in the future, small and medium-sized brands that focus on segmentation and specialization will still have room for survival, but how to survive in the short-term storms requires small and medium-sized brands to think about.