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.
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 in December 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% in December 2016.
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.
CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.
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