This is on top of safety fears sparked by the devastating spread of COVID-19.
China is once again at the spotlight of an infant nutrition controversy earlier this month following reports of infants and toddlers suffering from skull deformities and eczema after consuming a protein powdered beverage marketed as an alternative infant formula.
The owners of the mum-and-baby product store located in the Hunan province were since charged and two provincial officials sacked.
“News of this latest scandal has spread widely and quickly, and local mothers feel a mix of cynicism and disappointment. They are shocked at how similar scandals keep reoccurring,” Michael Norris, research and strategy manager at AgencyChina told NutraIngredients-Asia.
However, he pointed out that the saga was not only putting pressure on local Chinese infant nutrition brands, but also on the MNCs as well.
This is because the scandal also coincided with consumers safety concerns about imported infant formula, especially those from Europe, after the spread of COVID-19 across the continent.
“The local Chinese media has negatively portrayed European countries' handling of COVID-19. The scale and spread of infections in overseas have prompted concerns about European infant milk formula inputs and imports.
“In this environment, all players will need to push hard on safety cues and messages,” Norris highlighted.
Another expert, however, felt that the saga will positively affect Chinese consumers’ confidence in local brands as long as the products are compliant.
“It may benefit foreign brands to some extent but may not significant. Chinese customers know that local FSMP did nothing, as long as the local FSMP got the approval, it is qualified and it is welcome,” Cathy Yu, GM of the Food Business Division at CIRS said.
Chinese customs data has shown that the country imported 100,000 tonnes of milk powder in March and an accumulative of 430,000 tonnes in the first three months of this year, which has declined by 5.4% as compared to the same period last year.
There was, however, no data showing the breakdown on the importing countries as well as the volume of different types of milk powder imported.
Premiumisation
Chinese infant formula brands have been recovering from the 2008 melamine scandal in recent years.
One of the star players is Heilongjiang Feihe.
“Led by Heilongjiang Feihe, Chinese manufacturers are benefitting from a combination of factors, including strong penetration of lower-tier cities, where the two-child policy is having the most marked effect,” said a Euromonitor report published in September last year.
Other factors driving growth include the use of imported milk sources in their premium product range.
Norris echoed the viewpoint, pointing out how Chinese brands have been driving product premiumisation to push for business growth.
“They are entering and competing on premium price points and going after category opportunities in goat and organic infant formula,” he said.