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China’s Baby Food Market 2015
www.keeglobaladvisors.com
Drivers of China’s Baby Food Market Growth
Annual birth rate Gradual phasing out of the Only Child Policy Increasing disposable income
Food safety challenges AdopHon of Western baby food
Chinese Babies v.s. U.S. Babies
16.4 million Chinese babies born in 2013 3.9 million American babies born in 2013
Chinese Live Births between 2008-‐2014
16,122,163
15,947,275
15,956,829 16,073,886
16,383,884 16,437,498
16,870,000
15,400,000
15,600,000
15,800,000
16,000,000
16,200,000
16,400,000
16,600,000
16,800,000
17,000,000
2008 2009 2010 2011 2012 2013 2014
Abandoning Only Child Policy
China started pracHcing “Only Child” policy since 1980’s to control populaHon
China facing aging populaHon and sharp decrease of labor populaHon
November 2013, Chinese government allowed couples to have two babies if one of them is an only child
Chinese government may further ease the populaHon control by allowing all couples to have two children in the foreseeable future
ConservaHve esHmaHon: China may welcome 1 million addiHonal babies each year with the new populaHon policy since 2015.
Urban Residents Disposable Income between 2004-‐2014 in China
Currency=USD, Exchange Rate 1 USD = 6.15RMB Source: NaHonal Bureau of StaHsHcs of P.R.China
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Food Safety Challenges
Deteriora(ng environment* -‐ 1/6 of China’s arable land suffering from soil polluHon -‐ 13 mm + tons of crops harvested each year contaminated with heavy metals -‐ 22 mm acres of farmland affected by pesHcides
More and more Chinese moms choose to feed their babies with imported food.
* Source: New York Times December 31, 2013
Healthy vs. Chubby
Younger generaHon moms turn to western baby foods as supplement to baby’s diet emphasizing nutriHon
Older generaHon prefer smashed home-‐made adult food for babies, equaHng chubbiness with health
V.S.
Market analysis of China’s baby foods
Market size, market segments and market share
Imported vs. domesHc DistribuHon channels
2014 China Baby Food Sales by Segments
14.56
0.68
3.76
Formula Milk
Baby Cereal
Other
Bloomberg esHmated that China’s baby food market was $19 billion 2014, growing from $9 billion in 2009.
US dollar, billion
2014 China Baby Food Market Segments and Market Share
70.3% 0.2%
24.3%
2.5% 1.8%
0.5% 0.4%
Infant Formula Baby Juice Baby Cereals
Bojled Baby Food Baby Snacks Canned Baby Food
Other Baby Foods
Source: Datamonitor
2014 China Baby Food Market Share excluding Formula Milk and Cereal
46%
34%
9%
8% 4%
Bojled Baby Food
Baby Snacks
Canned Baby Food
Other Baby Foods
Baby Juice
Baby snacks = biscuits, rusks, cereal bars, rice cakes, other snacks
Other baby foods = fruit pots, yogurts and read-‐made meals
Sources: Bloomberg, Datamonitor
EsHmated sales of baby food and juice, excluding formula milk and cereal, was $3.76 billion in 2014 in China.
Imported vs. DomesHc Solid Baby Foods in China
30%
20% 15%
35%
Heinz
Beingmate
Nestle
Other
China’s Solid foods market is dominated by mulH-‐naHonals. Beingmate is a major domesHc player.
Beingmate’s Product Lines
Rusks Rice Cereal
Meet and Fish Floss Glucose
More Chinese Solid Baby Food Examples
Biscuits
Pasta Pasta
Tuna Floss
Select Foreign and DomesHc Brands AcHve in China
DistribuHon Channels
supermarket
hypermarket
Baby Food Specialty Store
Online
Other
Summary
$19 billion baby food sold in China in 2014
Unbalanced market product mix with formula milk and cereal dominaHng the sales of baby food, 77% going to formula milk and 20% to cereal in 2014
Economic and environmental factors driving the fast growth of baby food market
Foreign brands having more than 50% market share
PotenHal opportuniHes in segments of solid foods outside cereal such as quality and nutriHous snack food
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