Review of the First Year of Infant Formula New Policy

放大字体  缩小字体 Date:03 Jan 2019  Source:Global Foodmate  Writer:Global Foodmate  Views:229
 Infant formula new policy review

2018 was the first year that the infant formula registration system was established. With the rise of industry barrier in 2018, the companies that had gained formulation registration approval take their advantages to rush into the infant formula market and the competition intensified. Meanwhile, the slowing registration approval process in 2018 also made many companies that are still in the waiting list suffer.

Registration approval process slowed down

At the end of 2017, a total of 940 formulations of infant formula from 128 manufacturers had been approved, of which 93 were domestic manufacturers and 35 were overseas manufacturers. However, by the end of 2018, only 255 formulations received approval. It is estimated that more than 500 formulations are still waiting to be approved.

Generally speaking, the approval process was more stringent in 2018 than in 2017. The General Administration of Market Regulation has placed more emphasis on food safety. It was required to conduct on-site inspections of overseas manufacturers. The expert panel had already reviewed certain countries, but Australian and New Zealand have not yet been scheduled, thus an extending of the approval time was expected.

Infant formula market became more concentrated

Since the implementation of the infant formula registration system, more than 70% of the small and medium scale brands have been eliminated. Branded enterprises that have gained registration approval strengthened their competitiveness, thus the infant formula market became more concentrated.

According to an independent dairy analyst, during this market integration, domestic manufacturers seized more opportunities by adjusting their channel policies, compared with foreign manufacturers. The active channel policy is competing for the market share in small and medium scale cities (estimated market size of 10-15 billion RMB). Therefore, the performance and market share of domestic brands increased significantly.

Compared with the rapid growth of large-scale enterprises, however, some small business lost their competitiveness in the market. The number of infant formula brands in the market has already decreased due to the new policy, but the problem of oversupply and product homogeneity still exists. Next, the market might enter into the strangling stage of ‘Law of Jungle’.

Please note: Original article of Global Foodmate of Information Service and Business Department, please indicate the source from the Global Foodmate if reprint.

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