Baby Nutrition - China - December 2020

OVERVIEW
What you need to know
Key issues covered in this Report
Report scope
Definitions
Figure 1: Mintel’s definition of different income groups, China
EXECUTIVE SUMMARY
The market 
Baby nutrition market continue steady growth
Figure 2: Retail value sales forecast of the baby nutrition market*(Billion RMB), China, 2020-25
IMF dominates; baby supplementary foods gaining share
Figure 3: Retail value sales share of baby nutrition, by market segments, China, 2015-2020 (est)
IMF retail value sales forecasted to increase amid premiumisation
Figure 4: Retail value sales forecast of infant milk formula (Billion RMB), China, 2020-25
Growth momentum of baby supplementary food expected to be faster than IMF
Figure 5: Retail value sales forecast of baby supplementary foods* (Billion RMB), China, 2020-25
Baby health supplements share benefits under the big immunity and gut health management concept
Figure 6: Retail value sales forecast of baby health supplements* (Billion RMB), China, 2020-25
Future outlook considering the impact of COVID-19
Figure 7: Short-, medium- and long-term impact of COVID-19 on baby nutrition, China, December 2020
Companies and brands
IMF: leading domestic brands grabbing larger share
Figure 8: Leading companies’ value share in IMF market, China, 2018-19
Baby supplementary food: Nestlé gains greater share through Gerber, and big snack brands join the game
Figure 9: Leading companies’ value share in baby supplementary food market, China, 2018-19
International IMF brands centre around R&amp;D, while domestic brands eyeing on channel expansion
Fast-growing snack brands extend into baby supplementary food market
Health supplement brands exploring new demographic
The consumer
Most concerned with physical developmental issues
Figure 10: Health and feeding issues, July 2020
Parents seek functional food with fortified nutrition from a variety of categories
Figure 11: Consumption frequency, July 2020
Functional benefits outweigh feeding training purpose, but cognitive development bridges the two
Figure 12: Product functions in supplementary foods/snacks, July 2020
Knowledge gap exists for special functioning ingredients (especially A2 β-casein, MFGM and HMO)
Figure 13: Knowledge of ingredients in IMF, July 2020
Online information channels carry most weight
Figure 14: Information channels, July 2020
Special IMF is given greater attention
Figure 15: Select attitudes towards IMF, July 2020
Ingredient quality of meat brings concerns to meat based baby supplementary food
Figure 16: Attitudes towards baby supplementary foods/snacks, July 2020
What we think
ISSUES AND INSIGHTS
Building on gaps for special functioning IMF ingredients 
The facts
The implications
Figure 17: Examples of IMF and growing up milk that link key ingredients with more specific health benefits, Global, 2018-19
Figure 18: Examples of A2-based IMF, China, 2018-19
Decoding parents’ demand for cognitive development
The facts
The implications
Figure 19: Examples of baby food featuring innovative textures and fun shapes to develop kids intelligence, China and Overseas, 2019-20
Figure 20: Examples of baby food featuring innovative aroma, textures, and fun elements to develop kids intelligence, China and Overseas, 2015-19
Baby health supplements could tap into snack based format
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
The category continues steady growth
Continued low breastfeeding rate has limited impact on IMF
Baby supplementary food and baby health supplements are fastest growing segments
MARKET SIZE AND FORECAST
Mintel’s forecast
Figure 21: Retail value sales forecast of the baby nutrition market*(Billion RMB), China, 2020-25
Future outlook considering the impact of COVID-19
COVID-19 brings opportunities for domestic IMF brands to increase product value perceptions
Impact of COVID-19
Figure 22: Short-, medium- and long-term impact of COVID-19 on baby nutrition, China, December 2020
MARKET FACTORS
Number of newborns continues to experience negative growth
Figure 23: Birth rate, China, 2010-19
Figure 24: Women in childbearing age*, China, 2014-19
Figure 25: Population of second-birth, China, 2016-19
Continued low breastfeeding rate has limited impact on IMF
Quality issues can weaken consumer trust towards baby supplementary food
Special functions drive IMF value increase, whereas natural and convenience boost usage penetration of baby supplementary food
Figure 26: Top claims for baby milk and food launches, China, November 2015-October 2020
MARKET SEGMENTATION 
Baby supplementary foods gaining share
Figure 27: Retail value sales share of baby nutrition, by market segments, China, 2015-20 (est)
Infant milk formula (IMF)
Figure 28: Retail value sales forecast of infant milk formula (Billion RMB), China, 2020-25
Baby supplementary foods
Figure 29: Retail value sales share of baby supplementary foods*, by market segments, China, 2015-20
Figure 30: Retail value sales forecast of baby supplementary foods* (Billion RMB), China, 2020-25
Baby health supplements
Figure 31: Sales value and growth rate of baby nutrition, by segment, China, 2018-20
Figure 32: Retail value sales forecast of baby health supplements* (Billion RMB), China, 2020-25
KEY PLAYERS – WHAT YOU NEED TO KNOW
IMF: leading domestic brands grabbing larger share
Baby supplementary food: Nestlé gains greater share through Gerber, and big snack brands join the game
A2 protein becomes hotspot for IMF players
Sophisticated baby food brands offer more than just organic ingredients
Supplement brands utilise new demographic and joint force to grow business
MARKET SHARE
Leading domestic brands grabbing larger share in infant milk formula (IMF)
Figure 33: Leading companies’ value share in IMF market, China, 2018-19
Fragmented and competitive market in baby supplementary food
Figure 34: Leading companies’ value share in baby supplementary food market, China, 2018-19
COMPETITIVE STRATEGIES
Infant milk formula (IMF)
International brands continue to centre around additional health benefits (with special focus on cognitive development)
Figure 35: Top growing health claims in IMF and growing up milk, China, November 2017-October 2020
Domestic big brands focusing on distribution channel expansion
A2 protein becomes a hotspot
Figure 36: IMF that uses A2 milk as a base in the formula, China, 2018-19
Supporting breastfeeding to maintain brand awareness
Figure 37: “Feeding with Love in One Square Metre” initiative, China, 2018
Baby supplementary food
Brands not traditionally related to baby nutrition join the game
Figure 38: Baby supplementary food products by Three Squirrels and Want Want, China, 2020
Sophisticated baby food brands offer more than just organic ingredients to stand out
Figure 39: Baby food launches with an organic claim, China, November 2015-October 2020
Figure 40: Organic-claimed baby food launches using gourmet recipes, China, 2020
Supplement brands utilise new demographic and join forces to grow business
WHO’S INNOVATING?
Infant milk formula (IMF) innovation to watch
Continue to fill in the need for special formula milk
Figure 41: Share of selected claims in IMF and growing milk (1-4 years), China, Nov 2017 - Oct 2020
Figure 42: Examples of IMF products with additional health benefits, China and Overseas, 2018-20
Baby supplementary food innovation to watch
Immunity claims start to emerge in baby snack categories since 2020
Innovations promote added benefits as advantage over handmade
Figure 43: Examples of baby supplementary food designed for homemaking occasions, Overseas, 2019
A gap remains in reduced sugar varieties between China and other APAC countries
Figure 44: Shares of new baby supplementary food launches with “minus” China, Nov 2017 – Oct 2020
Figure 45: Examples of baby supplementary food featuring “no/reduced sugar” claim, Japan, 2014-19
Packaging innovation to watch
Innovations around convenience ramp up
Figure 46: Top growing convenience claims in baby foods (including IMF and growing up milk), China, November 2017 - October 2020
Figure 47: Examples of baby food products featuring convenience packaging, Global, 2019
Practice babies’ related abilities as new ways to cognitive development
Figure 48: Examples of baby food products featuring key skill development, China and Global, 2011-19
Using technology to achieve smart parenting
Figure 49: Examples of brands using technology to achieve smart parenting, China, 2019-2020
THE CONSUMER – WHAT YOU NEED TO KNOW
Physical development issues worry parents most
Parents seek functional food with fortified nutrition from a variety of categories
Cognitive development via key motor skill practice are welcomed by affluent parents
Knowledge gap exists for special functioning ingredients (especially A2 β-casein, MFGM and HMO)
HEALTH AND FEEDING ISSUES
Physical development issues are the main harassment
Figure 50: Health and feeding issues, July 2020
Poor appetite and growth issues are more likely to occur at 6-12 months
Figure 51: Health and feeding issues (poor appetite, height/weight/head circumference lags behind, sparse hair), by age of youngest child, July 2020
Immunity and gut health receive more attention after 12 months
Figure 52: Health and feeding issues (catching a cold/fever easily, gassiness/bloating, constipation), by age of youngest child, July 2020
The problem with allergies: lacking knowledge and product variety
Figure 53: Else Plant-Based Complete Toddler Nutrition, Israel, 2020
CONSUMPTION FREQUENCY
Parents seek diversified feeding options for their kids
Figure 54: Consumption frequency, July 2020
6 months - the prime age for most categories
Figure 55: Consumption frequency, by age of youngest child, July 2020
Detailed physical developmental benefits in Infant milk formula (IMF) are desirable
Figure 56: Consumers who feed their babies IMF more than once a day, by select health and feeding issues, July 2020
Figure 57: Top functional claims in IMF and growing up milks (1-4 years), China, November 2015-October 2020
Barriers to meat-based supplementary foods: concerns about meat quality
Figure 58: General attitude (I have concerns about the meat quality in baby supplementary foods), by consumers who have not fed their babies aged 0-3 with meat/fish floss and sausage in the last 3 months, July 2020
PRODUCT FUNCTIONS IN SUPPLEMENTARY FOODS/SNACKS
Functional benefits overweigh feeding training needs
Figure 59: Product functions in supplementary foods/snacks, July 2020
Immunity playing central role in baby supplementary foods and snacks
Figure 60: Product functions in supplementary foods/snacks (improving immunity), by parents who have fed their babies aged 0-3 with supplementary foods/snacks once and more than once a day, July 2020
Cognitive development combined with special feeding training are welcomed by high income earners
Figure 61: Select product functions in supplementary foods/snacks, by monthly household income, July 2020
KNOWLEDGE OF INGREDIENTS IN IMF
DHA, lactoferrin and lutein continue to be the most recognised IMF ingredients
Figure 62: Knowledge of ingredients in IMF, July 2020
Figure 63: Select health and feeding issues, by select ingredients that consumers have heard of it and know its function, July 2020
Gaps exist for brands to fulfil in special functioning ingredients (A2 β-casein, MFGM, HMO)
Figure 64: Gaps between IMF and growing up milk (1-4 years) launches with selected ingredients and consumers knowledge of such ingredients, China, 2020
IMF ingredient knowledge are related to education and income levels
Figure 65: Knowledge of ingredients in IMF (have heard of and know its function), by household income level, July 2020
Figure 66: Respondents who have heard of ingredients but don’t know the functions, by household income level, July 2020
INFORMATION CHANNELS
Online channels carry most weight
Figure 67: Information channels, July 2020
High income earners obtain knowledge from multiple channels
Figure 68: Information channels, household income level, July 2020
GENERAL ATTITUDES
Attitudes towards infant milk formula
Chinese parents are evolving towards rational IMF usage
Figure 69: Select attitudes towards IMF, July 2020
Special IMF is given greater attention 
Figure 70: Select attitudes towards IMF, July 2020
Attitudes towards baby supplementary foods/snacks
Parents are switching from brands to brands 
Figure 71: Attitudes towards baby supplementary foods/snacks, July 2020
Ingredients quality of meat brings concerns to them
Figure 72: Attitudes towards the quality of ingredients in meat-based supplementary foods/snacks and homemade supplementary foods, July 2020
MEET THE MINTROPOLITANS
Wide range of information sources boosts understanding and uptake
Figure 73: Information channels, by consumer classification, July 2020
More interested in specialised IMF
Figure 74: General attitudes (infant milk formula related), by consumer classification, July 2020
Higher expectation for cognitive benefits
Figure 75: Product functions in supplementary foods/snacks, by consumer classification, July 2020
APPENDIX – MARKET SIZE AND FORECAST
Figure 76: Retail value sales of the baby nutrition market (Billion RMB), China, 2015-25
APPENDIX – METHODOLOGY AND ABBREVIATIONS
Consumer Research Methodology
Abbreviations