With the declining birth rate in China in the past two years, the market capacity of infant formula industry is shrinking. Anxious milk powder enterprises are extending their tentacles to the adult formula market, which is regarded as a new growth point. In the last half year, a number of milk powder enterprises have launched adult formula brands or new products.
Adult formula market starts the year on a high note
The sales volume of adult formula in 2022 increased a lot compared to the previous two years. For individual maternal and children stores, the sales volume of adult formula in stores with better performance can reach several times that of previous years, and many maternal and children stores that did not sell milk powder for middle-aged and elderly people are now selling it.
According to public data, the market size of adult formula is about 20 billion Yuan in 2022, which is only one tenth of that of infant formula. However, from the perspective of audience group, the potential consumers of adult formula are much higher than those of infant formula. On the one hand, as the main consumers of adult formula, the number of middle-aged and elderly people is increasing. At present, there are 254 million people aged 60 or above in China, accounting for 18.1% of the total population, and the aging trend is accelerating. On the other hand, as young people pay more and more attention to health, some post-90s and post-00s also gradually show their enthusiasm for purchasing adult formula.
Although at present, adult formula is still a niche market with a narrow audience in China, and the performance support for new enterprises is very limited, the adult formula market may usher in a blowout development this year.
Adult formula is regarded as good but is not popular
So far, China's adult formula has gone through three stages of development. The first stage was from the 1990s to 2008, some top milk powder brands deployed in the first and second tier markets to fill the gap of adult formula nutrition products. The second stage is from 2008 to 2018, adult formula entered a relatively rapid development period and achieved all-channel coverage. It is now in the third stage, and the market is entering a new round of chaos.
On the one hand, consumers' cognition of adult formula has been improved, and the nutritional value of milk powder has been recognized by many consumers. However, on the other hand, as a long-standing subcategory, the market size of adult formula has not made a breakthrough, and there are no professional brands and products for young groups.
First of all, due to differences in diet habits, domestic residents, especially middle-aged and elderly people, generally do not have the habit of drinking milk. A considerable number of Chinese people are lactose intolerant, and a considerable number of people are not used to the taste of pure milk and milk powder. Such long-established tastes and habits are hard to change through consumer education.
Secondly, compared with infant formula for infant and young children, domestic residents' demand for adult formula is not rigid, which is more similar to basic nutrition products and supplements, and its functional positioning is more limited to "supplementing iron and calcium". Therefore, in the past, the prices of mainstream adult formula are generally not high, mainly low to mid-range products, which is difficult to compare with infant formula.
Due to these reasons, the profitability of adult formula is much lower than that of infant formula. Therefore, in the past, dairy enterprises did not have strong motivation to enter this subdivision circuit, and the competition within the circuit was relatively slow. Besides, its market regulatory standards are not as strict as infant formula, so the market is in chaos.
There are also significant differences in channels. As the main sales channel of infant formula, the sales of maternal and children stores account for nearly 70% of sales. The largest purchasing channel for adult formula is online shopping, accounting for 26% of the total sales amount. This was followed by hypermarkets, which accounted for 20.3% and 18.8% of sales amount in 2021, respectively. This is also a new challenge for dairy enterprises that newly deploy adult formula.
In addition, adult formula includes family milk powder, middle-aged and elderly milk powder, student milk powder, female milk powder and milk powder for special groups. Compared with infant formula, which only needs to appeal to parents, adult formula enterprises need to carry out long-term market education for the aged, middle-aged and elderly, pregnant women, young people and other groups. The scale of each group is limited, but each group requires specific consumer education, which is several times more difficult.
More subdivision, more professional and more scientific trend
In view of the low price and weak profitability of adult formula, players are also making their own moves in the aspects of high-end, differentiation and technology. Although the national nutrition demand and nutrition awareness have been further improved, adult formula cannot make up for the impact of a declining infant formula market in a short term. Adult formula may have more good performance in 5-10 years, and even exceed the market space of infant formula.
In order to achieve sound development of adult formula, it is necessary to grasp the general direction of professional nutrition, precise nutrition and functionalization, follow the general trend of national health, take clinical experiments and scientific and technological literature as the core, accelerate the research on national basic nutrition and professional nutrition, and quickly adjust from low-level homogenous competition to professional nutrition, so as to achieve real differentiation between functionality and nutrition.
In view of the current health pain points of adults, dairy enterprises are focusing on optimizing the formulas of adult formula products, adding the functional ingredients targeted to meet the needs of target groups in a more comprehensive way. Industry insiders believe that with the arrival of the era of professional nutrition, adult formula from basic nutrition to professional nutrition will be an inevitable trend. At the same time, consumers' cognition of professional nutrition adult formula also needs to be quickly followed up to solve the problem of consumers' lack of confidence in adult formula.
Source: China Food
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