As a core sector within the maternal and baby industry, baby formula milk powder continues to hold strong market share despite shifting consumption trends and increased competition. At the CBME Maternity, Baby, and Child Industry Summit 2024, renowned independent dairy analyst Song Liang outlined four strategic directions aimed at revitalizing the sector. Here’s a summary of the key insights, with an emphasis on precision nutrition and consumer education as critical levers for sustainable growth.
Baby Formula Milk Powder: Still a Profitable Industry
Despite market saturation and pricing challenges, baby formula milk powder remains one of the most profitable segments in the food industry. Song Liang emphasized that current difficulties, such as rapid price declines and benefit distribution imbalance, are primarily due to overcapacity and severe product homogenization.
To regain momentum, the industry must double down on innovation, particularly in formulations and consumer-centric strategies. High profit margins still exist—especially for those able to differentiate through precision nutrition and robust consumer education models.
Innovation Focus #1: Simulating Active Substances in Mother’s Milk
There is significant untapped potential in enhancing baby formula milk powder by more effectively simulating bioactive substances found in human milk, such as lactoferrin and whey protein. As research into breast milk continues to advance, incorporating these functional components will form a vital part of next-generation precision nutrition.
Developing formulations that are closer to the nutritional profile of mother’s milk offers brands the chance to lead in both efficacy and marketing narratives, while improving long-term consumer trust through science-backed consumer education.
Innovation Focus #2: Embracing Digitalization for Market Control
The power of digital transformation lies in enabling better control over goods, pricing, and distribution. For the baby formula milk powder sector, digital tools offer the ability to segment consumer groups more precisely and deliver tailored precision nutrition solutions.
Moreover, digital ecosystems create new touchpoints for consumer education, helping brands communicate the health benefits of specific formulations more effectively. Whether through WeChat mini-programs, private domain operations, or e-commerce platforms, digitalization supports both operational efficiency and brand equity.
Innovation Focus #3: Restructuring Business Models with Retail Channels
A major hurdle for baby formula milk powder companies is the distribution of interests among multiple stakeholders. Brands must create win-win benefit models for both online and offline partners to ensure healthy growth.
Through innovative channel collaboration, especially via integrated marketing and supply systems, companies can also push precision nutrition products into broader household categories—such as maternal, child, and elderly nutrition—expanding the category’s relevance beyond infancy. This transition demands not only product development but also strategic consumer education to build awareness and trust.
Innovation Focus #4: Elevating Consumer Education to Guide New Demand
One of the biggest assets of the baby formula milk powder industry has been its early investment in consumer education, such as mom classes and nutrition seminars. Song Liang believes this model should evolve to include more comprehensive precision nutrition content that resonates with broader demographics, including expecting mothers and aging populations.
As the birth rate declines, the focus should shift from volume to value. Brands can achieve this by introducing functional nutrition products that cater to the whole family—extending the life cycle of the consumer relationship. Through strategic consumer education, this transition becomes more feasible and effective.
Key Strategic Pillars for Future Growth
Song Liang concluded with four core action areas that companies in the baby formula milk powder industry must prioritize to stay competitive:
1. Price Control and Value Retention
Stabilizing prices within the current pricing system is essential for maintaining profitability, especially for premium precision nutrition offerings.
2. Market-Centric Production
Shifting from a production-driven to a demand-driven model ensures that capacity aligns with actual consumer needs, enabling better targeting and differentiation.
3. Developing Core Blockbuster Products
With rising consumer knowledge and decreasing population growth, creating standout baby formula milk powderproducts will be critical. These must combine advanced precision nutrition and unique branding to win market share.
4. Balanced Interest Distribution Across Channels
Brands need integrated online-offline ecosystems that ensure fair value-sharing mechanisms while maintaining influence over pricing and positioning—supported by strong consumer education campaigns.
Conclusion: From Baby Formula to Precision Nutrition for the Whole Family
In summary, while the baby formula milk powder market faces structural challenges, it also presents new opportunities through innovation, precision nutrition, and enhanced consumer education. By embracing a market-led, technology-enabled, and value-focused approach, the industry can not only sustain its current market but also evolve into a broader precision nutrition leader for all age groups in the household.
