China’s Milk Producers Shift Focus to Adult Consumers Amid Aging Population and Market Saturation
Source: The DairyNews
As China’s population rapidly ages and its birth rate continues to decline, the country’s dairy industry is undergoing a significant transformation. Intense competition in one of the world’s largest dairy markets is prompting companies to shift their focus from infant products to the growing adult and elderly demographic. This strategic pivot reflects the broader economic and demographic changes reshaping China’s consumer markets.
Strategic Shift in Dairy Focus
Historically, China’s dairy industry has been heavily centered on infant formula, driven by the country’s economic growth and increasing demand for high-quality nutrition. However, the landscape is changing as China’s birth rate hit a record low of 6.4 births per 1,000 people in 2023, and the population ages rapidly. These shifts have led dairy companies to explore new growth avenues, particularly in the adult and senior nutrition sectors.
The A2 Milk Company, headquartered in New Zealand, recently launched new milk powder products targeting the “adult and ageing population” in China. This move aligns with similar efforts by global dairy giants such as Danone, Abbott, Fonterra, and Nestlé, as well as prominent domestic brands like Yili and Feihe. These companies are increasingly focusing on senior nutrition, sports nutrition, and other specialized dairy products designed to meet the needs of older consumers.
Conor O’Sullivan, China manager for Bord Bia, Ireland’s food trade body, noted that new opportunities for dairy consumption are being created as companies adapt to the changing market dynamics. “There’s a lot of attention now on senior nutrition, sports nutrition, and other applications for these [dairy] ingredients,” O’Sullivan said, emphasizing the need for diversification in the face of oversupply and weak demand in many traditional categories of the Chinese food industry.
Market Dynamics and Competition
China remains the world’s largest importer of milk, with Rabobank forecasting a 2.4% annual growth in dairy demand through 2032. However, the infant formula market, once a cornerstone of the dairy sector, is facing a “negative volume growth rate” due to declining birth rates and intense competition. Rabobank analyst Michelle Huang highlighted the crowded nature of the infant formula market, suggesting that diversification into adult and medical nutrition sectors could offer new growth opportunities.
Foreign milk producers, which once dominated China’s dairy market, are now facing increased competition from domestic brands. The 2008 melamine scandal, which resulted in the deaths of several babies and the hospitalization of tens of thousands, initially led many Chinese consumers to prefer foreign milk products. However, the market has since evolved, with local producers ramping up output and the government pushing for higher self-sufficiency and greater regulatory control, particularly in the sensitive infant milk sector.
Jason Yu, managing director at Kantar Worldpanel, observed that almost every city in China now has a local dairy company. He also noted that government efforts to improve safety have led to consolidation in the market, with the top 10 brands in the infant milk formula sector now controlling 80% of the market—half of which are Chinese brands.
In response to these market pressures, some foreign companies have adjusted their strategies. US-based Abbott, for example, closed its infant formula business in China at the end of 2022 to focus more on adult products. Similarly, Nestlé shut down a factory in Ireland last year, partly due to challenges in the increasingly competitive Chinese market.
The Growing Adult Dairy Market
As dairy companies pivot to serve the adult and elderly population, supermarkets in China are increasingly stocking dedicated sections for adult milk products. These products often emphasize their protein and calcium content, targeting health-conscious consumers seeking to support their immune system, bone, joint, and muscle health.
For instance, A2 Milk’s new product for older consumers is formulated to provide specific health benefits, while Feihe’s product for the elderly features low-glycemic formulas designed to have a minimal impact on blood sugar levels. These innovations reflect the industry’s recognition of the diverse needs of China’s aging population and the growing demand for products that support long-term health and wellness.
Historically, China’s dairy industry has been heavily centered on infant formula, driven by the country’s economic growth and increasing demand for high-quality nutrition. However, the landscape is changing as China’s birth rate hit a record low of 6.4 births per 1,000 people in 2023, and the population ages rapidly. These shifts have led dairy companies to explore new growth avenues, particularly in the adult and senior nutrition sectors.
The A2 Milk Company, headquartered in New Zealand, recently launched new milk powder products targeting the “adult and ageing population” in China. This move aligns with similar efforts by global dairy giants such as Danone, Abbott, Fonterra, and Nestlé, as well as prominent domestic brands like Yili and Feihe. These companies are increasingly focusing on senior nutrition, sports nutrition, and other specialized dairy products designed to meet the needs of older consumers.
Conor O’Sullivan, China manager for Bord Bia, Ireland’s food trade body, noted that new opportunities for dairy consumption are being created as companies adapt to the changing market dynamics. “There’s a lot of attention now on senior nutrition, sports nutrition, and other applications for these [dairy] ingredients,” O’Sullivan said, emphasizing the need for diversification in the face of oversupply and weak demand in many traditional categories of the Chinese food industry.
Market Dynamics and Competition
China remains the world’s largest importer of milk, with Rabobank forecasting a 2.4% annual growth in dairy demand through 2032. However, the infant formula market, once a cornerstone of the dairy sector, is facing a “negative volume growth rate” due to declining birth rates and intense competition. Rabobank analyst Michelle Huang highlighted the crowded nature of the infant formula market, suggesting that diversification into adult and medical nutrition sectors could offer new growth opportunities.
Foreign milk producers, which once dominated China’s dairy market, are now facing increased competition from domestic brands. The 2008 melamine scandal, which resulted in the deaths of several babies and the hospitalization of tens of thousands, initially led many Chinese consumers to prefer foreign milk products. However, the market has since evolved, with local producers ramping up output and the government pushing for higher self-sufficiency and greater regulatory control, particularly in the sensitive infant milk sector.
Jason Yu, managing director at Kantar Worldpanel, observed that almost every city in China now has a local dairy company. He also noted that government efforts to improve safety have led to consolidation in the market, with the top 10 brands in the infant milk formula sector now controlling 80% of the market—half of which are Chinese brands.
In response to these market pressures, some foreign companies have adjusted their strategies. US-based Abbott, for example, closed its infant formula business in China at the end of 2022 to focus more on adult products. Similarly, Nestlé shut down a factory in Ireland last year, partly due to challenges in the increasingly competitive Chinese market.
The Growing Adult Dairy Market
As dairy companies pivot to serve the adult and elderly population, supermarkets in China are increasingly stocking dedicated sections for adult milk products. These products often emphasize their protein and calcium content, targeting health-conscious consumers seeking to support their immune system, bone, joint, and muscle health.
For instance, A2 Milk’s new product for older consumers is formulated to provide specific health benefits, while Feihe’s product for the elderly features low-glycemic formulas designed to have a minimal impact on blood sugar levels. These innovations reflect the industry’s recognition of the diverse needs of China’s aging population and the growing demand for products that support long-term health and wellness.
