The birth rate has fallen. At the same time, the death rate of the elderly has also decreased. Demographic changes are coming to China, the world's most populous country. Local and multinational companies doing business in the market are in trouble. In the current situation, these companies marketing dairy products are changing their marketing strategy. Changing the 'target market'. Until now, these companies have mainly focused on producing dairy products for children, but now they are targeting the elderly population.
The specific segment of the larger population around which the marketing strategy is organized is called as the target market in marketing terms.
Competition in China's dairy market is intensifying day by day. In addition, as the birth rate continues to decline, companies have to target different generations of buyers to survive, analysts said. New Zealand-based company The Atou Milk Company said last month that it will market a new milk powder to China's adult and elderly population.
Global companies such as Danone, Abbott, Fonterra and Nestlé have focused on similar products. Besides, local companies Ely and Feihe are not far behind.
Conor O'Sullivan, China manager of Irish food marketing company Board Beer, said, 'In addition to the nutritional needs of adults and sports nutrition, companies are now showing great interest in developing new areas of use for dairy products.'
He also said, 'Many sectors of China's food industry currently have more supply than demand. Efforts are being made to increase sales in these sectors.
China's birth rate has fallen to record lows in recent years. The country also lost the top population seat to India. In 2023, the birth rate in China was 6.4 per thousand. At the same time, the country's elderly population is increasing as the average life expectancy increases. Naturally, this has an impact on the economy and the consumer market.
China is the largest importer of dairy products in the world. Rabobank, a Netherlands-based company, predicts that the demand for dairy products in China will grow at an average rate of 2.4 percent until 2032. On the other hand, the demand for dairy products for children will continue to decrease.
In a report this year, analyst Michel Huang of the Dutch multinational financial institution Rabobank pointed out that the competition in the market for children's milk products has increased a lot. For this reason, he suggested diversifying the products besides focusing on the adult population.
Foreign dairy companies started doing business in China in the eighties. In 2008, thousands of children in the country fell ill after consuming formula milk from the local company Sanlu Group. Basically, after this incident, Chinese consumers turned to foreign dairy products.
But as the country's local companies increase production, the market of foreign companies is gradually shrinking. From automobiles to coffee production—local production has increased in all sectors of the country. This change in the country's production is mainly due to the government's policy of achieving self-sufficiency.
A person associated with the dairy sector said, 'In China you will find premium band, super premium brand and hyper premium brand products in addition to normal quality. Competition is fierce here. Meanwhile, the production of local companies is increasing.
Jason Wu, managing director of market research firm Kantar Worldpanel, said, 'Almost every city in China has a local dairy company. Last year, 80 percent of the dairy products market was held by the top 10 companies. Five of these companies are from China. Source: Financial Times.
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