China’s falling birth rate and sluggish economic recovery are expected to cause a double-digit decline in the country’s infant formula market this financial year, a2 Milk Co. said Monday.
Still, the company expects to clinch a bigger share of the shrinking infant milk formula market, which comprises almost 70% of the company’s sales, in 2024, it said in its full-year earnings statement.
The China market is “challenging” for now but is expected to steady in the longer term, Chief Executive Officer David Bortolussi said in an interview. The number of babies born in China fell 10% to 9.6 million in 2022, and is expected to fall further this year, due to the lagged impact of Covid-19, challenging macroeconomic conditions, and youth unemployment rates, with an increase in births expected next year, a2 said in its full-year results statement. Competition is also increasing in the Chinese market, it said.
China posted sluggish economic recovery following the end of the nation’s Covid Zero policy late last year and Chinese parents are increasingly favoring local baby formula brands, Bloomberg Intelligence said prior to the earnings, adding to headwinds for companies such as a2.
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