Cross-border Purchase Is Still A Big Opportunity For The Growth Of Milk Powder Firms

By Lucy

19:25:00, Mar. 8, 2020


They pursue high-quality life and pay more attention to imported products. Imported milk powder is greatly preferred by them.

When domestic milk powder brands have gradually ranked the top list, parents of new generations have continued to show enthusiasm for imported milk powder and the imported products are rich in categories. They pursue high-quality life and pay more attention to imported products. Imported milk powder is greatly preferred by them.


Imported milk powder sales account for over 50% and are still growing rapidly


Now, as China's milk powder industry is marketing to high-end customers, the high-end customers get more and low-end customers get less The share of middle and low-end products in the milk powder market has dropped from 55% to about 45%, and the combined share of high-end and ultra-high-end milk powder accounted for 55%. The ultra-high-end growth rate has reached 30%.


This is also in line with the development of the import market. In the "2019 Chinese customers’ report, Series II", it is pointed out that the sales of imported goods account for a very high proportion of high-end categories and high-end brands. Among the top 20 categories with the highest sales of imported products, the sales share of imported milk powder ranks first, and the share of imported goods exceeds 50%.


Similarly, the growth rate of imported milk powder is almost the same as that of similar categories, or even slightly exceeds. This is in sharp contrast to the diaper, which is also one of the two major categories of the Maternal and Infant market. The compound annual growth rate of imported diapers is in negative growth. Certainly, the growth rate of the whole market is slightly lower.


Cross-border is the will of both consumers and firms


With the gradual rise of parents of new generations, while supporting domestic milk powder, they will also continue to pay attention to imported milk powder. In the "Statistical Survey and Analysis Report On The Demand For Major Consumer Products" released by the Ministry of Commerce in July 2019, consumers believe that among Maternal and Infant products, suppliers and consumers of infant milk powder, infant supplementary food, infant diapers and children's toys are more willing to increase imports than to reduce imports. These subdivisions can not be met by the domestic brands.


The “2019 Research Report On China's Import Consumption Market” has also pointed out that a stable import consumption policy has effectively stimulated the confidence of import consumption practitioners in the industry and consumer enthusiasm for consumption. In fact, many milk powder firms are also actively embracing e-commerce channels. From the product layout of milk powder firms in cross-border channels in 2019, we can see that cross-border is not only consumers’ demand, but also one of the ways for milk powder firms to seek growth.


After the implementation of the formula registration system, the slow process has kept many milk powder brands out of the door. China has a large market, and firms have to try their best to enter the market. Thus, cross-border purchase has become a "specific way". It should be realized that the cross-border platform is not only a haven for unregistered brands. The major brands begin to take the initiative to accelerate the integration of the market and strengthen the omni-channel layout. Imported brands such as Aptamil, Karicare, a2 and other milk powder brands are outstanding in cross-border e-commerce. In fact, Chinese companies are also buying imported milk powder brands, so that channels can also be extended to cross-border e-commerce. For example, Healthy Times and Swisse subordinate to H&H (Health & Happiness Group), Kabrita subordinate to Ausnutria and so on are sold in cross-border channels.


In 2019, major brands have expanded their cross-border channels. For example, in March 2019, Meadjohnson signed a contract with Hai Huike, a cross-border e-commerce company in Chongqing; in July, ProCare Affinity, Meadjohnson’s new brand, has fully entered the Chinese e-commerce platform; cross-border purchase has played an important role in many brands such as Aptamil, Nutrilon, Cow&Gate, Karicare subordinate to Danone; and in May, the Hong Kong version of Aptamil Platinum version of low sensitivity 3 was officially launched, landing one after another on JD, Suning.com Co and other major cross-border e-commerce platforms. Since 2018, Nestle has stepped up its cross-border e-commerce business and successively carried out strategic cooperation with NetEase Koala. Its complementary food brand Gerber, Wyeth Illuma's HMO products, French milk powder brand Guigoz, and German milk powder brand BEBA have all been fully introduced into the Chinese market through the cross-border e-commerce model. In addition, Nestle has launched Australian NAN3 A2 formula milk powder this year, which has also been introduced into China through cross-border e-commerce channels.


In addition, it is also imperative for domestic firms to have the market share of cross-border e-commerce. For example, the Australian health brand Swisse acquired by H&H has achieved great success in China's cross-border e-commerce market. At the same time, it has also launched the French version of organic milk powder and cross-border probiotics to enter the cross-border e-commerce market. In 2019, it launched Biostime Australian version of organic formula in Australia, not only seizing the Australian market, but also implementing strategic cooperation with NetEase Koala to counterattack the Chinese market.


In addition to milk powder, supplementary food has also begun its deep ploughing and intensive cultivation in cross-border channels. For example, Nestle's infant food brand Gerber has joined forces with NetEase Koala to release a number of new products; and Japanese supplementary food brands have officially signed a contract with Chinese cross-border e-commerce company NetEase Koala to achieve in-depth cooperation in self-management, direct procurement, marketing promotion and other aspects.


All in all, the competition in the milk powder market has been intensified since 2019. At the same time, more diverse platforms have emerged, and the major milk powder brands are accelerating the layout of channels. Cross-border purchase is one of the indispensable channels for milk powder brands, especially imported brands. Meanwhile, the consuming capacity of the post-90s generation and post-95s is getting strong, and their cross-border consumption penetration rate is much higher than that of other age groups. Their pursuit of life quality and self-attitude representation continues to promote the sustained growth of imported milk powder consumption transactions.


In short, cross-border purchase shows a big opportunity for the growth of milk powder firms!

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