Foreign milk powder scenery is no longer

The once-blessed foreign milk powder giants are now having a hard time

After 10 years of rapid development

The occurrence of the melamine incident in 2008 severely hit the domestic milk powder line, and also allowed foreign brands to almost monopolize the high-end milk powder market in China

The watershed began in 2018

Why is the once-great foreign milk powder giant now in a downturn in the Chinese market?

Multiple Disadvantages Begin a Downturn

"The change of ownership of Mead Johnson is just a microcosm.

In fact, China's official two-child policy and the development of e-commerce channels have indeed brought new opportunities for foreign milk powder companies

However, the demographic dividend did not appear

The population decline in the first- and second-tier cities and the increase in the concentration of the third- and fourth-tier markets have made foreign milk powder firmly controlled by domestic milk powder for a long time.

As recently as May 2020, the CEO of Reckitt Benckiser, the parent company of Mead Johnson, also stated that the potential of China's low-tier market in the future is seen as the driving force for the transformation of Reckitt Benckiser's infant formula to ultra-high-end; global head of Nestlé's nutritional products strategic business Last year, it was also revealed that it would sink to the western China market and the third- and fourth-tier markets, and plans to enter 10,000 mother and baby stores in the next 18 months

However, several years have passed, and the channel sinking of foreign milk powder giants has not been successful

From the perspective of channel dealers, price confusion, lack of store support, and poor channel control are the main reasons why it is difficult for foreign brands to truly enter the third- and fourth-tier markets

There is still a chance for a comeback

So in the face of many disadvantages, can foreign capital usher in development again? "Foreign brands have lost in the service system of the sinking market in recent years, resulting in a continuous decline in customer stickiness

Primavera Capital has publicly stated that foreign brands of milk powder have encountered challenges from domestic brands in China in recent years, and urgently need to solve channel sinking and digital transformation

From the perspective of the industry, based on the external environment, management team, policy factors, brand effect, market share and other comprehensive factors, a few milk powder companies with strong comprehensive strength still have a very good chance to develop again in the future

In this regard, Song Liang proposed that foreign-funded enterprises still need to push the third- and fourth-tier markets and sink channels

"China Food News" (Version 04, June 15, 2021)

(Editor-in-charge: Yang Xiaojing)