The China
National Committee for the for the Wellbeing of the Youth, as well as AC
Nielsen, have published the so-called Blue Book of the China Infant Industry in
December 2016.
CCM has
analysed this report and gives a brief summary of the most important facts for
suppliers of infant-related products.
Source: Baidu
The new
Blue Book from the Child Development Centre, an organisation under the China
National Committee for the Wellbeing of the Youth, together with AC Nielson,
deals with the newest trends of infant-related products and the market trend of
those, including infant foods and equipment.
The main
statements of the Blue Book regard to the product quality and the sales channel
development. The product quality at all has experienced a further improvement
compared to the last years with a now stable trend. The different sales channels
whatsoever, have developed in different ways in China.
The
increasing product quality is crucial for suppliers in China, while Chinese
consumers are getting more demanded and request higher quality as well as safer
products for their children. Miao Yuchen, the director of the General
Administration of Quality Supervision, said: “In maternal & infant products
industry, the product quality is the priority among priorities as the product
quality is in relation to the physical and psychological health, as well as the
social harmony and stability”.
The sales
channels for infant products in China can be divided into three different
categories, namely mother & baby stores, e-commerce business, and
supermarkets. According to CCM’s research, the Supermarket was the only
provider of infant products for a long time. In the year 2009, mother &
baby stores popped up in China getting a huge number of shares soon, even
surpassing supermarkets in 2013. E-commerce is the youngest distribution
channel, appeared in 2011 with a massive growth since then.
The share during the year to June 2016 shows mother & baby stores as the biggest sales channel
with 45% of all infant products and a corresponding growth of 8% year on year.
E-commerce businesses experience an overall growth of 4.9%, which grants them
the second place as distribution channel with a share of 31%. At last, the
former biggest sales market, supermarkets, is constantly losing share at a
number of about 11%, resulting in a total share of 23%.
According
to CCM, the impressing leadership of mother & baby stores can be explained
by the professionality of the sales team in the shops, giving the possibility
to consult the parents and share their experience and knowledge, as well as the
convenient access to all relevant products in one shop. This trend is expected
to rise, looking at a growing middle-income group of Chinese parents, having
more money but less time to buy. The increasing share of these stores also
leads to a nationwide boom of more mother & baby stores, surpassing the
yearly increase of 10%.
Furthermore,
the prices of infant products in mother & baby stores have even undergone
those of supermarkets. The number of products with price falls increased 5%
points compared to 2015. This overall trend leads in fact to a decreasing
market value of this industry in general, according to AC Nielson.
E-commerce
businesses can thank their share increase to their convenience of ordering and
deliver to the house, together with the easiest price comparison online and
also the cheapest prices in general. CCM’s analysts state, that business to
customer sales make up two-third of the whole e-commerce business of infant
products, opening chances especially for small brands and companies with an
online distribution channel.
The product
mix of e-commerce businesses contains mostly large packs and multipacks. This
strategy gains this sales channel the lowest prices of all channels. Involved
companies are facing a price war at the moment, also due to the effort of
cleaning their inventory.
The
continuing loss of supermarkets in shares is explained in the lack of price and
service competitiveness, according to CCM. If supermarkets want to keep or even
increase the share again, these are the two most important adjusting screws to
move.
The winner
of the newest sales trends are still the big foreign suppliers of infant
products, recognizing early enough the potential of mother & baby stores
and e-commerce. Domestic manufacturers are still behind the big players, trying
to get some share in the markets of the big cities in China, while they are
discovering the new sales channels for themselves. Looking at China as the
world’s biggest infant formula market, according to Euromonitor, foreign and
domestic companies are doing good in keeping the sales trend in their minds to
not fall behind the more active competition.
Another
factor for the rising infant market in China is the new two-child policy of
China’s government. This gains an optimistic outlook for suppliers of infant
products.
About CCM:
CCM is the
leading market intelligence provider for China’s agriculture, chemicals, food
& ingredients and life science markets.
Do you want
to find out more about the dairy Market in China? Join our professional online
platform today and get insights in Reports, Newsletter, And Market Data at one
place. For more trade information on dairy visit our experts in trade analysis to get your insights today.
Tag: Dairy