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Cease of infant policy in China: A steady or an abrupt scope for U.S. Infant Formula and Baby Food Market?

Analysts have forecasted that the infant formula and baby food market in the Asia Pacific region is anticipated to show dominant growth in terms of revenue, owing to the additional newborn babies born in China following the relaxation of the one-child and two-child policy.

For the few health situations or individual circumstances where exclusive breastfeeding is not possible, alternatives like ‘breast milk from a healthy wet-nurse or breast-milk substitutes are recommended by institutions like WHO/UNICEF. Infant formula is partial or complete alternative dairy food for breast milk in one-year-old and has benefits like physical and mental health development in the toddlers.

Cease of infant policy in China: A steady or an abrupt scope for U.S. Infant Formula and Baby Food Market?

Being one of the most inhabited countries in the world, China dominates the Asia Pacific baby food & infant formula market. Due to the ever-growing aging population, fall in the reserve of the working population and pension deficit in the country, China has subsequently relaxed its one-child as well as two-child policy.

According to Ross Christieson, senior vice president of market research and analysis at the U.S. Dairy Export Council, this new scenario will allow parents to have more children, which will result in more infants to be born in future and will be the prime consumers for imported dairy products. Recently, a China-based representative for the U.S. Dairy Export Council, Daniel Chan further confirmed: “After China ends the one-child and two-child policy, there will be one to two Million additional newborn babies a year. However, dairy consumption is certainly expected to rise with the increased number of infants.”

The steady economic condition of the country has resulted in rising financial status of the people. Thus, parents can spend more on baby food. This factor largely attributes to the growth of the China infant formula market. This surge in the number of children can further accelerate the sale of the U.S. imported ultra-high temperature (UHT) pasteurized milk to China. They typically cost two to three times more than domestically produced milk, but many Chinese consumers are willing to pay higher prices for the safety and high quality that this product offers—especially as it is appropriate for the nutrition of their children.

This point is further supported by Jay Waldvogel, senior vice president of strategy and international development at Dairy Farmers of America, the nation’s largest dairy cooperative. He said, “The first thing a mom wants to buy in China is a glass of milk for her kid. The place in the world best positioned to fill that glass of milk in the future is the United States.” The experts agree that the U.S. dairy industry and the U.S. infant formula industry are promoted as a source of quality products and ingredients that offer exceptional safety records, as well as consistency and reliability due to their scale and technology. The devoted parental desire to provide the best possible nutrition to their children and millions more to come in China is expected to facilitate the proliferating and durable opportunity for the U.S. infant formula and baby food market.

Infant Formula Market

Also, premium offerings from the organic infant formula market and traditional A1 protein formula market to the parental consumers can grow sales and margins irrespective of the number of competitors. Thus, players from U.S. organic infant formula market like Abbott Nutrition International, Danone food & beverages Private Ltd. and Mead Johnson Nutrition introduced organic infant formula and baby food to capture demand for more premium-positioned organic products.

A June 2017 memorandum of understanding (MOU) between China and the U.S. government facilitates an incrementation in American dairy exports to China. This accidence marked incipient progress in the two country’s perpetual negotiations towards a colossal trade agreement in future. This MOU assures the Chinese authorities that a third-party certification body will be involved in keeping a check on the U.S. food manufacturers and food products.

Inkwood Research

Author: Inkwood Research

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