Deep adjustments in milk powder continue, and dairy companies need to "grab market share" this year; homogenized competition in nutritional products awaits resolution

Asking AI · What industry transformation challenges are hidden behind the homogenized competition in nutritional supplements?

By 2025, the performance of major infant formula companies has been gradually released. As the birth rate declines, many dairy companies have set their New Year’s goal as “grabbing market share,” and market concentration faces further increase. Meanwhile, dairy companies are also accelerating their layout in the nutrition supplement sector, with homogenized competition issues becoming apparent.

New Year’s Goal: Capture Market Share

“The theme of this year’s New Year’s rally is ‘The brave win in a narrow road,’” a domestic dairy company executive told reporters. “The ‘Long Baby’ bonus is about to run out, and the declining birth rate again puts pressure on formula brands.”

In 2025, with market order restoration and a brief rebound in birth rates, the performance of major dairy companies’ formula businesses has seen varying degrees of recovery.

Financial reports show that Beingmate Group (01112.HK)’s infant nutrition and care products (BNC) business achieved revenue of 5.26 billion RMB in 2025, a 20% increase year-on-year, with sales of infant formula in mainland China up 28.3%. Danone’s financial report indicates that in 2025, the professional specialized nutrition business revenue in China, North Asia, and Oceania (CNAO) was €2.77 billion, up 13.2%. Ausnutria (01717.HK) achieved a total revenue of 7.49 billion RMB, a 1.2% increase. Mengniu Dairy (02319.HK) revealed during its earnings call that its formula business achieved double-digit growth. Bright Dairy (600597.SH)’s other dairy product revenue was 8.5 billion RMB; excluding New Lite, domestic formula and cheese business revenue was about 900 million RMB, more than doubling year-on-year.

However, reporters learned that most of the performance growth of leading companies in this round mainly comes from product structure upgrades or market share increases, rather than industry-wide recovery. Since 2025, top dairy companies have accelerated formula competition, pushing products toward high-end. Financial reports show that benefiting from formula technological iteration and clinical evidence, Beingmate Group’s ultra-premium infant formula market share increased from 15.6% at the beginning of 2025 to 19.5% at the end of Q4. Danone’s management also revealed at the earnings meeting that growth comes from continuous high-end strategies and further market expansion.

Ausnutria’s growth is relatively special, mainly driven by rapid overseas business expansion. In 2025, Ausnutria’s goat milk formula brand Jiahbei Aite’s international business revenue grew 50.7% year-on-year to about 970 million RMB, with the Middle East, CIS, and North America markets growing 65.5%, 40.1%, and 39.5%, respectively.

It is noteworthy that in 2025, the birth population again sharply declined to 7.92 million, and the number of children aged zero to three decreased from about 41.9 million in 2020 to 26.5 million in 2025. Population decline has led to a shrinking infant formula market, and competition among dairy companies in 2026 is becoming more intense.

Bright’s small-molecule milk powder operator He Kanghui told First Financial that in 2025, the company sold over 2 million cans, a 35% increase year-on-year, and the competitive pressure this year will far surpass last year. Generally, Stage 1 and Stage 2 formula each account for 50% of the market, so how to effectively seize market share this year has become even more important given the new birth population situation.

In a recent investor interview, Danone’s management stated that the structure of newborns in China has changed. Under fierce stock competition, the company’s focus is on capturing more market share. Currently, there are about 500 formula brands in China, more dispersed than the global market, presenting further opportunities for consolidation and high-end development in the infant formula market.

Reporters learned that after experiencing the pain of the last price war, the new round of formula competition is shifting from brand and price levels to technology, formulas, and models. For example, at the end of 2025, Chinese Feihe launched the world’s first fresh raw material traceability system for formula, allowing consumers to scan codes to view production information of whey protein and lactoferrin, distinguishing itself from competitors by showing raw material freshness and establishing a differentiated advantage. Danone also expressed intentions to introduce more advanced formula products into the Chinese market.

Independent dairy analyst Song Liang believes that currently, rising production costs and shrinking market size mean that industry deep adjustment has not yet ended. Moving forward, as market competition intensifies, market segmentation and concentration will further accelerate.

Homogenized Competition in Infant and Child Health Products Needs Resolution

As the infant formula market shrinks, more dairy companies are turning their attention to nutrition and health supplements. From the 2025 financial reports, the investment in nutrition supplements by various dairy companies has further increased.

Previously, companies like Yili, Feihe, and Beingmate had begun to layout the nutrition and health supplement market through acquisitions of mature supplement brands or establishing new divisions, with initial results. In 2025, Beingmate’s global health supplement brand Swisse revenue surpassed $1 billion, with a 13.3% increase in the Chinese market; Ausnutria’s supplement business grew 5.2% year-on-year; Feihe’s other dairy products and nutritional supplements earned 2.06 billion RMB and 180 million RMB respectively, with growth rates of 36.1% and 6%.

In recent years, major domestic and international formula brands have also increased their investments in nutrition and health supplements. However, data from the maternal and infant chain service platform Huiyuan Bang shows that in 2025, the sales per store of nutritional supplements in surveyed maternal and infant stores declined slightly, with penetration rates remaining flat, and growth stagnating.

Reporters visited some maternal and infant stores in Beijing, where many nutritional and health supplement products were on sale, mostly concentrated in probiotics, calcium, lactoferrin, DHA, etc. Products and brands are hard to distinguish, and consumers find it difficult to identify quality differences.

Cao Tianwei, general manager of China Baby Business, told reporters that the homogenization problem of nutritional supplements is becoming more prominent. The categories of nutrients suitable for infants and young children are limited, leading to homogenized competition within a small category space. Compared to the essential nature of formula, nutritional supplements require higher operational capabilities, and some participants lack the awareness and experience to develop the market. Additionally, many products are produced via OEM, with some even coming from the same factories, making it difficult to create differentiation.

Song Liang also warned practitioners that low OEM costs have led to serious homogenization in infant and child nutritional supplements, with prices being very transparent, which is not a healthy development model. It is expected that in the future, as leading companies with strong innovation capabilities and technological reserves continue to invest in technology and innovation, differentiation among enterprises will become more obvious, and market competition will become more rational.

(This article is from First Financial)