China Business Daily/China Business Network (Reporter Zhou Ziwei/Picture) Soon after the new national standard for milk powder was announced, Wyeth and Jianhe Group both announced their product formula upgrades. What are the reasons for the two major milk powder giants to choose to upgrade the formula at this time? Will the milk powder industry experience a round of formula upgrade competition?
Milk powder showcase in a Wal-Mart supermarket in Fengtai District, Beijing
Two major milk powder giants upgrade formula
Since April, Wyeth and Jianhe Group, the two leading companies in the milk powder industry, have successively announced formula upgrades to their products.
On April 18, Wyeth, the leader of foreign milk powder, announced the launch of a new product, Qifu Yunchun. The biggest highlight of this product is the addition of the key immune protein osteopontin (OPN). It is understood that osteopontin is an important immune protein, the highest content in colostrum, and it plays an important role in intestinal growth, immune regulation, and nervous system development in the early stages of life.
Why do we need to upgrade the formula? Wyeth said that this is because the current formula upgrade of the product is in line with the demands of maternal and child nutrition consumers in the post-epidemic period to improve the baby’s immunity from the inside out and obtain comprehensive scientific nutrition.
A few days later, Jianhe Group also made a similar move. On April 22, Health and Healing Group announced a comprehensive upgrade of its ultra-high-end milk powder brand, Biostime Xingyao series, in which Biostime Paixing milk powder is added with lactontin (LPN), and the brand is positioned to “inspire intrinsic protection.”
Regarding the reason for the formula upgrade, Li Fengting, CEO of Health He Group China, stated at the Group’s 2021 partner annual meeting that lactonectin, as an immunologically active component in milk, can increase the proportion of protective cells in the baby’s body and reduce the discomfort factor by 60%. Lactoferrin is four times rare and can provide babies with all-round nutrition they need.
Fierce competition among milk powder companies
What are the reasons for the two giants to upgrade their product formulas one after another?
It is understood that in the past two years, affected by factors such as the decline in the birth rate, the size of the milk powder industry that relied on demographic dividends in the past has begun to shrink, and the competition of milk powder companies in the stock market has intensified. This may be a major factor that forces companies to upgrade their formulas. factor. According to data from the National Bureau of Statistics, the birth rate of my country’s population in 2019 was 10.48%, the lowest since 2000.
Liu Lili (a pseudonym), a milk powder distributor in Fujian, told a reporter from China Business Daily that as a milk powder distributor, she can deeply feel the decline in the milk powder market. Since 2019, her store has done a lot of consumer education work, including mother class training and parent-child theme DIY activities, in order to narrow the distance with consumers.
“Especially since the outbreak of the new crown pneumonia epidemic, I have discovered two major changes. One is the intensification of the terminal sales promotion of the leading milk powder companies; the other is that the CEOs of many milk powder companies even visit the market in person, and the highest-level leaders I have seen before are only corporate provinces. Senior manager. It shows that the milk powder manufacturers are not having a good life.” Liu Lili sighed.
Dairy industry analyst Song Liang told China Business Daily that the new national standard for milk powder has just been announced, and many new milk powder products that meet the new national standard will be launched in the future. The Biostime Yuan Xing Yao series and Wyeth Kai Fu series are both imported series, and the launch speed of products that meet the new national standard will be much slower than that of domestic milk powder. In order not to be left behind, they can only list the upgraded products first to seize the market.
The industry formula competition started?
So what role can the two giants’ formula upgrades play? Will they be accepted by consumers, and will they lead to the entire industry’s formula upgrade competition?
Song Liang believes that the formula upgrade of the two giants can play three roles: one is to reshape the price system, the other is to redistribute benefits at the channel level, and the third is to reposition products at the consumer level. “Before the products that meet the new national standards are put on the market, these upgraded products will have greater appeal to consumers.”
Liu Lili also revealed to a reporter from China Business Daily that current consumers are becoming more and more rational and paying more and more attention to formulas. “From the previous OPO (structural lipid) to HMO (breast milk oligosaccharide) to lactoferrin, consumers will find the advantages of the formula by looking at the ingredient list by themselves, not just listening to the simple introduction of the sales staff. I think this time The formula upgrade should attract the attention of consumers, but it still needs a process for consumers to fully accept it.”
At the level of the milk powder industry, more and more milk powder companies may join the team of formula upgrades in the future. Song Liang believes that in the near future, other foreign-funded companies in the milk powder industry will follow up with formula upgrades. After that, formula products that meet the new national standard for milk powder will also compete to market. In short, the competition to upgrade the formula of the milk powder industry is about to start.
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