On 29 Oct, the Chinese government announced its plans to end the “one-child policy” which has been implemented since 1979. Under the amendment to the policy the Chinese government is set to allow all couples to have two babies. Since the inception of China’s one child policy, cultural issues and social pressures have unbalanced Chinese demographics forcing the government to readdress its policy which should provide new opportunities for the infant formula industry.
According to Euromonitor, 2014 saw the Chinese infant formula market reach 86.7 billion RMB in value. Future development will be driven by the number of newborns, average consumption and the unit price of infant formula. In terms of per capita consumption, currently China’s breastfeeding rate is about 30%, close to the world average.
From a unit price perspective, the ratio of retail price to per capita disposable income is much higher than the international average level. Diversified purchasing channels such as the booming e-commerce sector and overseas buying intensify competition helping to stabilize unit price.
The two-child policy will be pivotal in stimulating China’s infant formula market in the coming years. It is predicated that 1.5-2 million more babies will be born in the every year precipitating a 10% -15% increase in annual sales.
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