Key Points of This Article
1. Market Size: The sales volume of children's milk powder on online Taobao platforms in 2021 was 570 million yuan, a year-on-year increase of 521%, accounting for about 3% of the infant and toddler milk powder (infant formula + children's milk powder) market share, with the overall market size of children's milk powder at around 20-30 billion yuan.
2. Competitive Landscape: Traditional dairy companies Feihe, Aptamil, Junlebao, Mead Johnson, and Friso make up the TOP5, collectively occupying 60% market share, with major single products gradually leading the market.
3. Growth Drivers, Barriers: The infant formula market is shrinking, the demographic dividend of children over 3 years old is boosting the children's milk powder market growth, but there are issues like the lack of industry unified standards, insufficient scientific validity of products, and low consumer recognition.
According to Moojing data, in 2021, on Tmall and Taobao platforms, the sales of infant formula milk powder increased by less than 1% year-on-year, and the sales of infant liquid milk only grew by 4% year-on-year, while the sales of children's milk powder targeted at children over three years old experienced a surge, increasing by 521% compared to the previous year.
The saturation of the infant formula market has become a fact. As various milk powder companies are looking for new opportunities, children's milk powder has become the hot track recently. So, how is the performance of children's milk powder? Can it become the next "infant formula"? Let's take a look with Moojing.
Children's milk powder is a nutritional supplement formulated according to the nutritional needs of children’s growth. Unlike infant formula, it is not used as a staple food, but as a supplement to the children's normal diet.
In China, it is not common for children over three years old to consume milk powder. The consumer awareness of children's milk powder is not high, and rather than drinking milk powder, many parents prefer to give their children liquid milk to supplement calcium and protein.
In the promotional pages of some popular milk powders, we see that the high-quality calcium and protein content in milk powder and liquid milk are not significantly different, which also provides a certain development space for children's milk powder. Milk powder is a dry powder obtained by removing water from cow's milk through processes like sterilization, concentration, and drying. Although it undergoes a series of processes such as high-temperature spray drying, a cup of milk prepared according to the powder mixing recommendations and a cup of pure milk do not have a significant difference in calcium and protein content.
The solid nature of milk powder also gives it certain qualities that ordinary liquid milk does not possess. Milk powder has more "malleability," allowing it to be mixed denser if needed—mixing 40g of milk powder compared to 30g contains more nutritional elements. Additionally, some nutrients not added to ordinary liquid milk can be included in children's milk powder. The product can make subtle nutritional adjustments according to the physical needs of children in different developmental stages, such as adding hydrolyzed egg yolk powder to aid bone growth, probiotics to enhance immunity, lutein to protect vision, and DHA to aid brain development. Moojing has noticed that there is infant formula liquid milk on the market, and it remains to be seen whether formula liquid milk for children will impact the children’s milk powder market in the future.
2021 was a year of rapid development for children's milk powder. On the Taobao platforms, the total annual sales volume was 570 million yuan, which was a significant increase compared to 2020, with a year-on-year increase of 521%. During the Singles' Day sale in November, the sales volume peaked at 180 million yuan, a year-on-year increase of 458%. The trend continued to improve in 2022, with sales reaching 150 million yuan in March, a year-on-year increase of 18 times. According to Mother & Baby Times data, the overall market size of children's milk powder is currently around 20-30 billion yuan.
Looking at the entire industry, in 2021, the online Taobao market's sales scale for infant and toddler milk powder (infant formula + children's milk powder) reached 17 billion yuan, with children's milk powder only accounting for about 3% market share. The demand for infant milk powder is the largest, occupying 85% market share. However, with the traditional infant formula growing weakly, the growth rate of children's milk powder is particularly notable.
Since 2021, the number of brands related to children's milk powder has gradually increased, especially in March of this year, the number of brands increased significantly, totaling 400 on the Taobao platform, and the average market price of the products has been around 200 yuan, which hasn't changed much so far.
As more brands enter the market, the market CR5 shows a gradually decreasing trend. In July 2021, the number of brands increased significantly, and the market CR5 also fell accordingly, currently around 60%.
Over the past rolling year, on the Tmall and Taobao platforms, the TOP5 brands of children's milk powder are Feihe, Aptamil, Junlebao, Mead Johnson, and Friso. These traditional dairy companies remain strong, each occupying 17%, 15%, 14%, 9%, and 5% market share, respectively. All major brands are strategically positioning in the children's milk powder track, seizing the market advantage.
According to the Milk Powder Think Tank's "hot search" comparison for children's milk powder, we can see that in March, in the TOP20 hot search rankings, products from Yili, Feihe, and Junlebao accounted for 14 spots, which to some extent also reflects the national recognition and acceptance of leading dairy companies in the children's milk powder market. Yili ranked tenth in the past year's Taobao sales amount but had three products/series listed, including Yili QQ Star, Jindian Precious Care stage 4, and Jindian Cenarius Pasture stage 4, with the QQ Star series remaining in first place; Feihe's Ziran (Ziran Protection), Ziran (Strong Protection), Ziran (Learning Protection), and Star Sail stage 4, had four products listed, with the Ziran series occupying three of the top ten spots; Junlebao had seven products including Little Luban Quanli Love, Little Luban Quanwei Love, Little Luban Multivitamin Love, Xiaoqi Talent, Youcui, Little Luban, and Zhi Zhen stage 4, with the Little Luban series alone taking four spots, indicating that children's milk powder major single products are gradually setting the trend and leading the market.
Yili QQ Star Hazelnut high series children's milk powder has sold 13,000 units since its launch on Tmall in March 2021, with a total sales amount of 4.53 million yuan. The product is aimed at children over three years old, adding high calcium, high protein, DHA for brain development, and probiotics for intestinal health, among others. Overall, consumers give positive feedback on this milk powder, with the high calcium and taste being recognized by many consumers.
In 2020, Feihe launched the Ziran Protection children's milk powder suitable for 3-6-year-old children in their rapid growth period. Addressing issues such as low immunity and growth pains during growth, the brand innovatively developed the 3-plus nutrition group formula, adding lactoferrin and yeast β-glucan to boost immunity, fight bacteria, and help babies produce their own immune antibodies. Besides, M-16V probiotics awaken the baby's intestinal function and form a "beneficial bacteria" team in the intestines. According to e-commerce data, in the past rolling year, its sales amount on the Taobao platform reached 25.39 million yuan. Reviews indicate that consumers have concerns about the online price being higher than offline, and the milk powder's brewing, taste, and milky flavor are affirmed by consumers.
Junlebao, which started earlier, introduced the "Little Luban" children's milk powder series as early as 2015. The Little Luban Quanwei Love children's milk powder launched for the first time in 2020 includes 36 nutrients, with added lactoferrin, zeaxanthin, the double prebiotics FOS+GOS, DHA, and is the first children's milk powder to add both PS and Vitamin K2 simultaneously. They later introduced an A2 milk source version, and their Quanwei Love children's milk powder had a sales amount of 4.92 million yuan on the Taobao platform in the last year.
Children's milk powder can present a rapid growth trend due to the push from enterprises and more so from policy reasons.
The implementation of the new national standard for infant formula and the advent of the second formula registration has led to a reshuffling in the infant formula market, causing many companies to shift their focus to the children's milk powder track.
On one hand, China has not yet introduced relevant standards for food targeted at children over 3 years old. Unlike the clear standards for 0 to 3-year-old infant formula and complementary foods, production and packaging label standards for food for children over the age of 3 are executed in accordance with adult standards, without differentiation by age group. This provides brands with considerable room for development. On the other hand, the birth rate is continuously declining, the newborn market is shrinking, and the stock of infant formula is insufficient, while children over 3 years of age have a larger population size. According to the Seventh National Population Census data, China’s population aged 0-14 accounted for 17.97% in 2020, and the small population peak of newborns in 2016-2017 has led to a continuous increase in the group of children over three years of age.
However, at present, with only a two to three hundred billion scale in children's milk powder, to maintain sustainable development and even to become the next "infant formula" with a market scale of over a hundred billion, there are still many difficulties to overcome. As mentioned earlier, children's milk powder is not regarded as a staple food like infant formula. When parents have more options such as liquid milk and nutritional products, how can children's milk powder ensure it is the parents' top choice?
We see that currently, products on the market lack clear and unified industry standards, leading to consumer skepticism due to some products' advertised effects and added nutritional elements, which cannot provide scientific and robust verification and rationale. At this stage, it has become difficult to further penetrate the consumer market by simply adding all the popular ingredients at once. Nutrients such as DHA, lactoferrin, and lutein have become standard in children’s milk powder, which also challenges brands to continually invest in scientific and technological research and development, creating their technological barriers and technological strongholds, innovating formulas, and launching innovative products targeted at specific stages and consumer demographics.
Furthermore, according to Kantar's consumer index, in 2021, the market penetration rate of children's milk powder was only 10%, and specialized market education is also something for brands to consider. As consumers have low awareness of children's milk powder, it is easy to generate differences in consumer perceptions. Additionally, the various marketing promotions on the market can easily lead to a crisis of consumer trust. Brands can carry out professional knowledge popularization on social media platforms such as Weibo, Douyin, Xiaohongshu, and mother-and-child vertical e-commerce social platforms, starting with professionalism and refinement, to increase consumer awareness of children's milk powder.
It is worth noting that in March this year, the Infant Formula Food Industry Committee of the China Health Care Association has initiated a project related to children’s powder standards, planning to discuss and develop group standards for children’s milk powder and related fields, and on March 14, they sought drafting group members (units) among the member units. This is undoubtedly a significant boost to the standardization of the children's milk powder market.
