China remains the largest global infant milk formula (IMF) market, but a perfect storm of declining birth rates and increased competition from homegrown brands has forced foreign manufacturers to rethink their strategies in recent years.
In 2024, the number of births increased by more than half a million, spurring optimism about the segment’s future growth. This uptick didn’t have an immediate positive impact on the value of the infant formula market, which declined by 5.6% in 2024, Bain & Company and Worldpanel reported. However, the category remained stable in retail value, with no clear shifts between the premium segment and other price segments.
Premiumization has been a key strategic pillar for many foreign IMF manufacturers. Premium products signal superior quality to the consumer while commanding a higher price point, allowing manufacturers to differentiate from the regular, mainstream offering.
Growth in the premium category is tied to China’s middle class, which is among the fastest-growing in the world. Pew Research Center estimates this income group has grown from a 3.1% share of the population in 2000 to 50.8% in 2018 – an increase of around 670 million people. And by 2030, China’s middle class is projected to grow by 80 million according to S&P Global. In 2024 alone, per capita income increased 5.3% to ¥41,314, according to China’s stats bureau.
Meanwhile, the market share of premium IMF products in China expanded from 32.8% in 2023 to 37% in 2024.
Health awareness drives premium IMF segment
Besides a growth in disposable income and evolving labor dynamics – with more women now part of the workforce than ever before – improved health awareness is also driving the premium and ultra-premium IMF category.
Manufacturers are competing to develop IMF that matches the nutritional value of maternal milk, with key regulatory wins such as China’s approved use of human milk oligosaccharides (HMOs) in infant formula enabling new opportunities for product development.
Marketing efforts to highlight the benefits of premium IMF ingredients are also ramping up – for example, Danone’s Enfamil brand links HMO use to immunity support on-pack to communicate the product’s health benefits; and Nestlé’s Illuma brand also displays ‘HMO’ prominently on-pack on its first stage 4 formula made and sold locally in China.
Regulatory changes lead to market recalibration
The introduction of China’s new national standards for infant formula, implemented since 2023 (see sidebar), also impacted the category.
The market has become more concentrated as some of smaller players were squeezed out due to increased cost of compliance. The regulatory changes also disrupted the premium segment, with Feihe seeing a dip in sales of around 10% after the new standards kicked in; while the a2 Milk Company and Aptamil increased shares to 6.4% and around 13%, respectively.
What do China’s new IMF standards comprise?
China improved nutrient requirements with stricter minimum and maximum levels for protein, fat, lactose and essential trace elements and banned the use of added sugars such as fructose and sucrose in Stage 1 and Stage 2 formulas. Safety requirements were also strengthened with tighter limits on microbial safety and contaminants.
Around 80% of IMF is produced by domestic brands – but in 2023/24, foreign brands performed better in the infant formula segments, Bain & Company and Worldpanel reported.
According to NielsenIQ, sales of IMF rebounded from Q3 2024, and Yili, Aptamil, Friso, and Nestlé were the top-growing brands that year.
Fast-forward to H1 FY25, Kantar Worldpanel data shows that the English label IMF market grew 7.1% thanks to growth in stage 1 and 2 products and more consumers switching from China to English label products. Meanwhile, the China label IMF market shrank in value by 8% in the period, due to lower volumes and stabilizing pricing pressures.
China’s top 5 IMF players
Feihe
In 2024, Feihe’s revenue – of which IMF sales make up around 92% - grew 6.6% YoY in 2024, with gross profit rising 8.7% YoY, and net profit up 11.1%. Revenue growth far exceeded the IMF segment’s expected flat to low single-digit value growth in the year.
Feihe’s performance was achieved through premiumization, cost efficiencies, and brand-building through marketing campaigns such as ‘Wise Babies Opt for Feihe’.
Earlier this year, the firm also launched an aggressive incentive strategy in Hohhot – to provide RMB10k–100k in subsidies per child – in a bid to grow its market share and gain brand loyalty from local consumers.
In terms of NPD, Feihe is diversifying beyond IMF into adult and personalized nutrition.
In an apparent diversification of its strategy, Feihe launched Supernova Cheese, a low-calorie snackable cheese with nutritional benefits; and introduced AIBEN Enjoy Move Functional Powder, a functional protein powder designed to meet personalized nutrition needs across different life stages.
Yili
In 2024, Yili increased its IMF market share position to 17.3% from 16.2% in 2023, the company said in its annual report.
Yili maintained or slightly grew its volumes and its premium IMF brand Jinlingguan saw a double-digit revenue increase and a market share gain of 2%.
The company’s Kabrita goat milk and Youzi Xiaoyang formulas also grew, the company reported. Overall, milk powder and dairy revenue increased 7.53% YoY in FY24.
Going forward, Yili is set to ramp up IMF NPD and bolster its science and development efforts to come up with a competitive set of premium IMF products. In May 2025, the company demonstrated how infants fed its Pro-Kido formula supported health – by decreasing bronchitis cases by 64% and antibiotic use, by 57%. The company launched Pro-Kido in Hong Kong with the idea to capitalize on a market where parents are willing to pay up to 50% premium for products with science-backed claims.
Global expansion is a key pillar in Yili’s long-term strategy. In 2024, the company increased its overseas IMF sales by 68%, though details of regional and category performance were not disclosed.
Danone
Danone is experiencing market share gains in China’s infant formula market. The maker of Aptamil reported its portfolio made further gains in 2024; and according to Barclays analyst Warren Ackerman, Aptamil has grown 20% over three years in that market.
The ultra-premium segment is the one Danone sees most potential in, with deputy CEO Juergen Esser stating during an investor update that the Chinese consumer “continues to uptrade vis a vis the best recipes, which gives us a lot of confidence that we can launch those kinds of propositions with success in the market”.
Entering ultra-premium IMF market in the region for the first time, Danone launched Nuturis in Hong Kong in late 2024, with CEO Antoine de Saint-Affrique stating this was “the closest we have been so far to breast milk...not only in the composition of the milk, but in the way the milk has been designed”.
At the same time, the company doesn’t see a ‘fundamental change of trend’ when it comes to China’s birth rates; with a slow-down rather than reversal on the cards, according to the company’s modeling.
In 2024, Danone also launched Aptamil NEO 3 in Hong Kong and China, with a patented combination of ingredients and without added sugars to support babies’ growth and development.
The group expanded its IMF range with products that cater to infants with compromised microbiomes, such as those born by Cesarean section; and launched an infant formula product enriched with dairy lipids.
This includes five HMOs and bifidobacterium breve M-16 and mimics the characteristics of lipids found in maternal milk, with Danone stating that infants fed with their IMF gain a BMI similar to that of breast-fed infants and leads to improve cognitive outcomes at school age.
Nestlé
In China, infant nutrition was the largest contributor to organic growth in 2024 with high single-digit growth driven by NAN and supported by improved sales momentum for illuma, the company said in its annual report. Similarly to category leader Feihe, Nestlé also outperformed the wider market in growth terms.
For the Swiss CPG major, HMO-enhanced launches in the premium segment drove growth. Notable new products in China included Wyeth illuma, Nestlé’s first liquid infant formula in Mainland China that contains HMOs; and Wyeth S-26 with a blend of nutrients including DHA and alpha lipids formulated to increase myelination for brain development.
As its competitors, the company is ramping up R&D and science-driven innovation while aiming to strengthen its premium category offerings to appeal to the growing health-conscious and middle-class market.
The a2 Milk Company
With a 6.4% share of the market, New Zealand’s The a2 Milk Company generated NZ$560m in IMF sales in China, comprising NZ$305m of China label products and NZ$258m of English and other labels.
The company is betting on premium products and differentiating through its a2 milk protein offering by promoting it as gentler for infants’ digestion.
According to Kantar Worldpanel data cited by the company, the a2 protein segment grew 14% in H1 2025 and now make up 20% of the China IMF market value, an increase of 18% over FY24.
In FY25, the company is planning to launch another English label IMF product, likely to feature HMOs and be positioned above its a2 Platinum product. So far in H1 2025, the firm has not introduced any new IMF products in China, but instead focused on growing sales of existing China label and English/other label products through marketing, pricing, and distribution efforts.
During FY24, the company launched a reformulated China label infant formula product to comply with China’s new standards, and introduced a2 Gentle Gold premium infant formula for Stage 1 infants.