China to Implement New Plan to Consolidate Domestic Baby Formula Industry

Published Date : Jun 18, 2014

The baby formula market in China has been the subject of many controversies and debates. This could now change with China unveiling a brand new blueprint for consolidating its fragmented baby formula market. The report indicates that China could have just about 10 manufacturers earning over USD 160million annual sales revenue by the end of 2015. The infant formula industry consolidation report was unveiled by the country on Friday. 

The two-phase reforms in this sector will begin immediately, according to an official from the Ministry of Industry and Information Technology. As per the plan, the ten largest domestic manufacturers of baby formula will hold a 65% market share. This will be 20% higher than the current consolidated market share of the top 10 Chinese baby formula makers. Moving further, there will only be three to five manufacturers by 2018. These companies could potentially be reporting over 5 billion yuan in sales. And, by the same time, the top 10 companies will hold nearly 80% of the entire market share. As of June 2014, only about six of the total 128 registered baby formula makers report annual revenue higher than 2 billion yuan.

The key highlight of this consolidation plan, is however to make sure that manufacturers utilize raw milk that comes from forms controlled and owned by them. This will pave the way for stringent quality control measures and companies can also target better results with higher quality products. 

Officials opined that this plan set by the government was attainable, and it would also be beneficial to companies by helping them improve profitability.