On February 22, the new national standard for infant formula milk powder ended the "buffer period" of the new policy and officially came into effect. Products that do not meet the new national standard will be banned from production.

As of the latest, 112 brands of 31 milk powder companies have obtained the "tickets" to participate in the next round of market competition, and some companies are still in the process of follow-up.

However, a reporter from China Business News learned that the expected new national standard may not be as effective as expected in the elimination of small and medium-sized milk powder brands, but there is no suspense about the intensified competition for formulas.

The new national standard turns to formula competition

　　Since the new national standard was announced on March 18, 2021, it has also attracted the attention of the industry. Since the new national standard has more detailed and higher requirements for the formula of infant formula, and is superimposed on the second round of formula registration, the threshold for approval has been significantly increased.

The competent authority has also given a buffer period of nearly two years, and the new national standard for milk powder will not be officially implemented until February 22, 2023.

　　Since 2022, some milk powder companies have announced their progress one after another. Especially since January 2023, relevant departments have accelerated the speed of approval. As of the latest batch on February 15, a total of 112 brands from 31 milk powder companies have passed the approval process. The new national standard was approved, which was less than market expectations.

　　The reporter noticed that compared with the old national standard, the new national standard for milk powder splits the standards of stage 2 and stage 3 infant formula products into two separate items, and adjusts the proportion of major nutrients such as protein and whey protein in the formula, selenium, Ingredients such as manganese and choline have changed from optional additions to mandatory additions; and the addition of sucrose, fructose, etc. is prohibited.

　　Regarding the difficulties of the new national standard, China Feihe responded to Yicai that the core of the adjustment of the new national standard for milk powder is "more suitable" and "more precise", which requires a more detailed product framework, more precise formula nutrients, more coordinated safety indicators, and raw materials. The requirements are stricter.

　　It is worth noting that, compared with the previous round of formula registration, the dairy companies mainly competed for the total number of registered formulas. In the new national standard and the second registration, the top dairy companies will use the new national standard adjustment to launch a formula competition. Extensive use of new technologies and clinical research results, hoping to take the lead in stock competition.

　　According to data from China Feihe, the new national standard requires that the protein index of second- and third-stage milk powder be generally lowered by about 30%, mainly to avoid increasing the risk of obesity.

While the index is lowered, it also puts forward higher requirements for the scientific rationality of product nutrition, and also raises the requirements for formula and technology in disguise. Research and development will become the highlight and core of future milk powder competition.

For example, the series of protein adjustments of China Feihe's new national standard products come from the results of a follow-up research conducted by it and the Institute of Nutrition and Health of the Chinese Center for Disease Control and Prevention on non-breastfed infants aged 6 to 11 months.

　　Xu Sa, Chief Scientist and Innovation Officer of Mead Johnson China, responded to Yicai that with the official implementation of the new national standard, the infant formula milk powder industry is entering the next round of scientific competition, which will be an innovative challenge that will test the technological capabilities of enterprises , Product power, driving Chinese infant formula milk powder to return to the essence of formula.

　　The reporter noticed that the new national standard formula announced by Mead Johnson this time also covers the frontier exploration of milk powder formula by Mead Johnson China. Technologies such as MFGM (milk fat globular membrane) and prebiotic PDX/GOS are more widely used in the new national standard formula. , and some categories are also the first to use the above-mentioned new technologies in the industry.

　　On February 21, Yuexiu Group also announced the latest progress after the acquisition of Huishan Dairy. According to Zhang Huirong, general manager of Yuexiu Huishan Milk Powder Division, its next step will focus on expanding infant formula products made of Jersey milk. This establishes a product difference with competitors. The Jersey breed currently only accounts for 1% of the total number of dairy cows in the world, and there are fewer domestic dairy companies.

　　In this round of formula competition, in order to solve the problem of "self-talk" among formula function companies, leading companies including Mead Johnson and FrieslandCampina have begun to promote the work of clinical evidence. Difficult to operate has also intensified the industry's "volume".

The effect of market clearance may not be as good as expected

　　Due to the decline in the birth population for six consecutive years, the number of new births in China will only be 9.56 million in 2022, which is almost halved compared to 18.83 million in 2016. This also means that the total milk powder market is shrinking rapidly, and the performance of milk powder companies will increase even more It comes from structural upgrades and increased concentration.

　　According to the research report of Huatai Securities, the number of target milk powder consumers may decline by about 10% in 2023, so it is expected that the scale of the domestic milk powder industry will still decline by a single digit in 2023.

　　Therefore, milk powder companies and distributors pay more attention to the impact of the new national standard and secondary registration on the future domestic milk powder market structure.

The industry believes that after the implementation of the new national standard, one-third of the milk powder brands on the market may withdraw, leaving market space for redistribution.

According to the Haitong International Research Report, manufacturers that fail to pass the new national standard are expected to account for about 10% to 15% of the Chinese market, corresponding to sales of 16 billion to 24 billion yuan.

　　A reporter from China Business News noticed that among the list of companies that have passed the new national standard, the proportion of leading milk powder companies is relatively high, such as China Feihe, Yili, Junlebao, Mead Johnson, Wyeth, Royal FrieslandCampina, Danone, etc. One brand has passed the approval, and the number of small and medium-sized milk powder companies is relatively small, which is more conducive to the early deployment of leading companies.

　　However, in the actual visits, the channel dealers kept a wait-and-see attitude towards the clearing effect of the new national standard.

Ma Hao, a Shandong milk powder distributor, told CBN reporters that in the past two years, the number of small and medium-sized brands in the regional market he is in charge of has already decreased significantly, and the stores have almost become an arena for big brands.

　　A person in charge of a domestic milk powder company revealed that in recent years, large domestic brands such as Feihe, Junlebao, and Yili have swept the 3rd to 5th tier markets where small and medium-sized milk powder brands are located with the help of channels and brand advantages.

According to what he has learned, the sales volume of many small and medium-sized milk powder companies has declined significantly in the past two years, and some even produce less than 300,000 cans a year, failing to meet the total quantity requirements of the factory, and they are also facing withdrawal.

　　Song Liang, an independent dairy industry analyst, told Yicai Global that some small and medium-sized milk powder companies to be eliminated may only have a yearly sales of one million or tens of millions, because the actual market clearance effect may not be as much as expected, based on ex-factory prices , may only have a scale of 1 billion to 2 billion, which means that in the future, if the leading milk powder companies want to grow, it will still be a dialogue between the strong and the market competition will become more intense.