The infant formula industry has entered the stock market. The consumption of milk powder industry is determined by the number of newborn population and per capita consumption. In recent years, China’s demographic dividend has gradually disappeared with the decline of the birth rate. At the same time, the breastfeeding rate has been at a low level, and the per capita consumption is difficult to rise. Therefore, the growth space of milk powder consumption in the future is relatively limited, and the infant powder industry has entered the competitive stage of the stock market. The growth of infant formula market in the next five years is mainly driven by price. It is estimated that the market scale of infant formula in China will reach 189.73 billion yuan in 2026.
Structural opportunities in the stock market. 1. Offline cities are the main incremental sources: compared with the first and second tier cities, offline cities have a large population base and more newborns. Therefore, offline cities have a larger infant milk powder Market and become an important incremental source of milk powder market. 2. Stage 3 powder and special infant formula still have room for growth: Euromonitor expects the market scale of stage 3 / special infant formula to rise to about 10.4 billion yuan in 2026. 3. The product side presents four major trends: coexistence of high-end and high cost performance, full life cycle, fine differentiation of functions and diversification of milk source categories. 4. The importance of mother and child channels and online channels has further increased.
Industry concentration has increased, and domestic brands have more advantages. The implementation of the registration system in 2016 alleviated the serious problem of product homogenization in the milk powder industry and accelerated the withdrawal and integration of small and medium-sized brands. According to the data of European milk powder market, the top ten brands accounted for 38% of the market in 2016. After the implementation of the registration system, until 2021, the proportion of the top ten brands in China’s milk powder market increased to 56%. In the short term, the logistics of imported milk powder is blocked due to the impact of the epidemic, and the aftermath of the safety problem of imported milk powder has not disappeared. Domestic milk powder is expected to increase the marketing layout and increase the market share during this period. In the long run, with the introduction of policies such as the secondary registration system and the new national standard, the industry threshold and concentration will be improved. Small and medium-sized manufacturers will withdraw one after another due to unbearable competition and policy pressure. Large domestic brands will continue to optimize their products and improve their brand image and market share.
The core competition of milk powder enterprises in the future. 1. Strong brand power; 2. Diversified product matrix; 3. Mature CRM system; 4. Healthy growth target and stable price; 5. Coordinated layout of the whole industrial chain.
Investment advice. The milk powder industry has entered the stage of squeeze growth, and the intensification of industry competition will continue for some time. However, we believe that there are still structural development opportunities in the industry. The introduction of policies such as the secondary registration system and the new national standard will further enhance the competitive advantage of domestic milk powder leading enterprises. The market share of domestic milk powder will continue to increase and lead the rapid growth of some sub categories. At present, the valuations of China Feihe, Aoyou and other infant powder preparation enterprises are in a low position, which has fully reflected the pessimistic expectations of the market. The future industry volume and price trend and the long-term profitability of leading enterprises are still guaranteed. It is suggested to pay attention to China Feihe, Aoyou, Inner Mongolia Yili Industrial Group Co.Ltd(600887) etc.
Risk tip: the newborn population continues to decline, food safety problems and the competition pattern worsens beyond expectations.
