While China’s infant formula registration is already in full swing, some manufacturers are looking towards China’s adult milk powder market. Nestlé recently upgraded its middle-aged and elderly milk powder product portfolio with the addition of a new brand called "Yiyang" in 2016. In collaboration with the popular Chinese video site iQiyi, Nestlé announced the launch of “the first video area exclusive for the middle-aged and elderly” with Yiyang as the program sponsor.
“Adults aged 50 and over already account for 25% of the Chinese population”, says Marianne Tsanis, VP of dairy business in Nestlé Greater China Region, “We believe Yiyang will gain market traction in China.”
Double-digit growth for three straight years
According to Nestlé scientists, middle aged and elderly people have significantly different nutritional requirements than other demographics due to age related changes in physiological functions.
"Over the past three years, there has been significant growth in the middle-aged and elderly milk powder market in China, mainly attributed to the relatively low penetration rate of this product category,” says Marianne.
According to Chinese dairy expert Song Liang, adult milk powder in China currently has an annual market value of 7 to 8 billion yuan, of which local brands such as Yili, Mengniu, Yashly, etc. account for 4 to 5 billion yuan. The rest are imported brands such as Anlene and Nestlé Yiyang.
The annual sales of Nestlé’s middle-aged and elderly milk powder are expected to reach approximately 4 billion yuan in Mainland China. Despite reluctance to disclose specific market share and sales, Marianne says that "Yiyang" is ranked in the top two middle-aged and elderly milk powder brands in the Chinese market and has maintained double-digit growth for three consecutive years.
Targeting China’s “new 50+”demographic
At a recent press conference Nestlé Yiyang shared some of its latest insights on the– the "50+" demographic.
“By offering tailored health solutions for the middle-aged and elderly in China, our vision is to open up new possibilities for their lives and highlight the concept of the new 50+," says Marianne. According to a research cited by her, 70% of people over 50 in big cities use the Internet every day as a medium for information, recreation and contact with friends and family. "The growing trend is optimistic, allowing us to see more opportunities." Marianne says that based on a previous survey and information of 50 + age group, Nestlé has provided custom columns for them, including movies, TV series, news, health and documentaries.
Jia Mei, director of nutrition and health at Nestlé Greater China, describes the new 50 + age group as being “fashion insiders”. A survey from China’s top news aggregation app "Toutiao" (means “headlines”) indicates that in 2016 page views of information related to this food industry sector jumped from 700 million to 1.7 billion which is assumed to correlate with growing demand for these products.
“We uphold a philosophy of a good and active life after 50. We want to enable the 50+ communities to promote their active lifestyle and empower them to explore new options and establish a healthy lifestyle, "Jia Mei says.
Necessity for market cultivation
Although milk manufacturers are optimistic about this sector of China’s food market, some industry experts are urging caution and conclude that explosive growth is unlikely to be achieved in the short-term.
Song Liang points out four major barriers for the growth of middle-aged and elderly milk powder:
First, the overall consumer trend shows that the current generations of 50 and 60 somethings are not accustomed to using milk powder
Second, consumers may be more inclined to choose drinkable products instead of milk powder
Third, milk powder is not the only choice for the elderly and there is considerable competition from plant protein powder and other protein powders.
Song Liang also believes that some companies which due to new regulations will have their infant formula brands forced from the market will channel their spare capacity to manufacture adult milk powder production which will increase market competition.
"The rapid growth of middle-aged and elderly milk powder will occur when people born after 1970 enter old age." Song Liang also says that adult milk powder cannot be defined as simple FMCG. Future milk powder products will need to be more professional and tailor health solutions to meet specific needs, placing higher demands for research and development.
In Nestlé's view, the challenge of this market is to understand the target demographic, and cater to their unique demands. “There is a significant difference between the new 50+ communities now and those of a decade ago in China. The biggest challenge is whether we know enough about our target consumers today," Marianne says, “By anticipating their needs and updating our products, we can provide healthier solutions and forge ties with our consumers.” Marianne believes that market education and cultivation are "most important” to tap into the extremely important middle-aged and elderly milk powder market.
Regulatory environment for adult milk
The manufacturers of dairy products are required to be registered with CNCA prior to the entry into China (see CNCA approved manufacturers for dairy products from here).
Relevant regulations and national standards:
GB 7718-2011 National Food Safety Standard General Standard for the Labeling of Prepackaged Foods
GB 2760-2014 National Food Safety Standard Standard for Uses of Food Additives
Disclaimer: the above is the author's personal opinion and is not the opinion or policy of Chemlinked.
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