From the retail market perspective, the milk powder market still holds a strong market share. As the fundamental sector of the baby and child industry, how can it maintain market share and find new growth points? Recently, at the CBME Maternity, Baby, and Child Industry Summit 2024, independent dairy analyst Song Liang offers four directions.

The following is a summary of Song Liang’s sharing, organized by CBME insights:

Currently, baby formula milk powder is still a good industry, especially since the average profit of baby formula milk powder still exceeds that of the entire food industry. The current issue is the problem of uneven distribution of benefits under the new pricing system conditions, and the industry’s consumption downgrade is mainly caused by the supply and demand situation. On the one hand, there is a large supply and overcapacity, and on the other hand, there is a very serious homogenization of products. Under these circumstances, the average price in the industry tends to decrease. However, in the past two years, prices have dropped too extremely and too quickly, resulting in an insurmountable relationship of benefit distribution under the new price band conditions, thus causing some current problems. Looking at future development trends, innovation remains the top priority for milk powder. 

Based on innovation, development can unfold in four dimensions:

1. Formulas primarily based on simulating active substances found in mother’s milk
   In recent years, many active substances, like lactoferrin and whey protein, have been simulated in baby milk powders. There are thousands of active substances in mother’s milk, and there is still much room for development in this field in the future. Regarding the technological innovation of baby formula milk powder products, it is hoped to simulate the active substances in mother’s milk more effectively, comprehensively, and economically, continuously applying them to baby milk powder.
2. Leveraging the power of digitalization
   The essence of digitalization is to control goods, channels, and prices, ensuring that those who truly work for the brand and product receive fair profits and benefits.
3. Innovative cooperation models with channels
   Essentially, the form of business is circulation, and the nature of business is the good distribution of interests among different interest groups. Only a good distribution of interests can promote the development of business and the rational allocation of resources. With more and more participants today, whether online or offline, various interest groups are involved. How to design better benefit models to meet the needs of different parties, and how to innovate new business forms that can better reach consumers while meeting the interests of offline participants, is a crucial point.
4. Innovative ways of communication with consumers
   In terms of consumer education, over the past two or three decades, whether it’s health products or other foods, they have all educated consumers through compliant methods like direct sales and conference marketing. In the baby formula industry, around 2000, some domestic companies applied a new model, namely the launch of mom classes education. Is such a consumer education system suitable for other groups? Can baby formula enterprises and maternal and baby channels shift from an industry that traditionally centers on baby formula milk powder to one offering precision nutrition for the whole family? I believe this is feasible. Baby formula milk powder has provided huge profits for the entire industry over the past 20 years, also promoting the rapid development of the entire maternity and baby industry. With the decreasing number of newborns, the industry’s increasing maturity, and the decline of the pricing system, we need to shape another industry that allows for better development and transformation—what we call precision nutrition for the whole family, and functional professional nutrition aimed at middle-aged and elderly people. Both in terms of hardware and software, the milk powder industry will be the main participant in functional nutrition for the entire family in the future.

In summary, looking at the future development of the milk powder industry. The core can be attributed to four points:

1. Control over goods and prices
   Although it is still difficult for some enterprises to control prices currently, basically they can maintain price stability under the existing price system, which is a good start.
2. Market-centric approach
   Brand owners must remember one thing: The mistake of the past was being factory-centric, continuously inflating the market, which must be quickly changed in the next two years. In the future, we need to be market-centric and adjust production capacity according to market guidance.
3. Shaping a soulful core blockbuster product is the key to winning future competition
   With declining population numbers and increasing information symmetry, in the future, brands should still focus on blockbuster products.
4. Proper distribution of interests between online and offline channels
   Especially through private domains, an integrated online and offline system should be established. In the distribution of interests between online and offline, brand owners should have a say and decision-making power.