China announced its move to a two-child policy last week, due to concerns over its ageing population and a need to support its economy.
The one-child policy will stay in place until March next year, after its original controversial introduction in 1979 to slow the Asian country’s population growth.
Raymond Ng, China food regulatory specialist for dairy and infant formula products from REACH24H Consulting, told Dairy Reporter that sales of infant formula can be expected to grow by up to 15%.
The expected jump in baby numbers is set to boost not only China’s domestic infant formula industry, but sales on an international level.
“The market share and sales from international infant companies represent a significant number,” said Ng.
“International infant formula companies including Mead Johnson, Wyeth, Nestlé, Abbott and International Nutrition Co contribute 34% of the infant formula market share, so it just demonstrates how significant the infant formula import market is in China.”
The import market is thriving, Ng added, due to a mistrust in domestic infant formula companies, and a belief that imported products are of higher quality and safety. Confidence is low in domestic products, since an estimated 300,000 babies were made sick due to the 2008 melamine scandal in the country.
He said: “There has been an increase in enquiries and business for the past two years, especially from SMEs exporting infant formula and baby snacks to China. We have successfully helped numerous infant formula companies comply with Chinese infant formula regulations.”
It was reported that shares in Danone increased 3% after the news was announced, showing the market’s positive reaction to the change in policy.
“In addition, as there are new opportunities in cross-border e-commerce, more international infant formulas are taking advantage of this regulatory lax and booming channel driving sales,” Ng said.
Regulations surrounding e-commerce are changing quickly though, he concludes, “so the sustainability of this channel is uncertain”.
Euromonitor figures show that sales of baby food in China have grown by over 15% every year since 2010, and this growth is set to continue with China’s new child policy change. Last year saw sales of almost $19bn, this is expected to rise to over $50bn by 2020, according to the Euromonitor data.