Challenging development of the baby food sector in China

China began easing its once-strictly enforced one-child policy back in 2013. However, over the past four years, the birth rate has still declined.

Anecdotal data from the first half of 2021 suggests that another double-digit decline in births for the current year is highly likely.

Demographic barriers, competition, regulatory risks, and now possible “premiumization” pressures create structural uncertainty about the future growth of the infant formula (VMI) sector. This means that the Chinese VHI market faces the risk of downgrading revenue and margin guidance if players fail to implement their chosen strategies. As a result, VHI companies serving the Chinese market must be aware that circumstances are changing from both a market and a regulatory perspective.

PioneerProduct based on research.rabobank.com