Global infant formula market diversifies strategies as regional demands drive innovation

13 Jul 2022 ---As demand for infant formula remains steady across global markets despite supply shocks in the US, companies are diversifying their products to meet different regional demands. Nutrition-rich products are highly sought after by consumers across the globe, while interest for specific ingredients vary depending on geography.

NutritionInsight speaks to industry players active in global markets on how these observed differences impact business strategies and delve into the details of what shapes the differences.

“Parental demand may differ through geographical regions as a result of different dietary habits, cultures, and sources of information. Of the countries researched, two ‘distinctive’ groups regarding moms’ concerns are product requirements and knowledge,” says Dr. Chyn Boon Wong, lead research associate at Morinaga Milk Industry.

“Moms in Indonesia, Vietnam and China behaved more similarly as a group, and Australia, Brazil, UK, Russia and USA as one, though note nuances still exist among these countries. China is the biggest formula market, given the low breastfeeding rate. Vietnam and Indonesia are also big in formula usage (mostly combination feeding, i.e., with another feeding method).”

Peter Speerstra, portfolio manager, Early Life Nutrition at DSM, explains how immunity is one of the top concerns for many moms with children aged 3-12 due to the global pandemic of COVID-19. 

“Besides immunity, maintaining a healthy diet and having healthy teeth and bones are also important to moms.” 

Probiotics becoming a priority?Cultural differences and dietary habits may be an explanation for demand varieties.
Speersta adds some key claims on packaged products appeal to mothers more than others.“ Provides complete nutrition” and “supports immune health” are the most appealing, followed by “supports overall health.”

“Parents from different regions have slightly different top concerns for their children. Despite the differences, there is a clear trend that parents are increasingly seeking out products that use prebiotics and probiotics,” says Boon Wong.

According to Innova Market Insights, probiotic claims as well as no added sugar and immune health are gaining prominence in the Asia Pacific region, which was also the leading region for baby formula and baby milk launches between April 2021 - March 2022. 

“Evidence of the positive effects of a balanced microbiome is driving parents to look beyond vitamin and mineral fortification when considering maternal and infant nutrition,” he notes.

Perceptions and regional interests
Societal expectations, such as acceptance of formula among lactating mothers, are also influencing factors, Speerstra underscores. The acceptance levels were low in Australia, the US, UK and Russia. “These countries also have high usage in cow’s milk when weaning their children.”

While formula feeding is mainly used due to lack of breastmilk and with the perception that the child isn’t getting enough food, differences have been spotted in each market.In Australia, Russia,the UK and US, acceptance rates for turning to formulas are low among lactating mothers.

“While breast milk is the gold standard for infant feeding, moms in Indonesia, Vietnam and China use formula milk to provide the right amount of vitamins and growth. In Australia, the UK and the US, the usage of formula is dominated by shared feeding responsibility between parents or caregivers,” says Speerstra.

“It is essential to continue innovating for countries like China, Vietnam and Indonesia as ingredient awareness in these countries is high, and ingredients play an important role. Formulas play a role of assurance and support in EMEA and the US.”

According to DSM, taste is another important factor for mothers in Australia, the UK and Russia.

Quality over quantity
Trust in brands is essential in the US, UK, Australia, Brazil and Russia. For Indonesia, Vietnam and China, the combination of ingredients and quality, coupled with benefits that drive performance, are reasons for choosing the Growing-up Milk (GUM) brands, Speerstra notes.

Previous reporting on China’s infant formula industry reveals the rising demand for premium products rather than volume. 

Immunity is another concern for many mothers with children between 3-12. This applied to 38% of mothers globally, and 30% of mothers report seeking infant formulas with immune health support, a DSM study reveals. 

Plant-based and digestion on trend
Recently, the trend of plant-based infant formula alternatives has been rising, as is emulating breastmilk.

Terhi Sinkko-Hynninen, category manager of baby food and ice cream business at Valio Powders, previously told NutritionInsight: “The importance of optimal nutrition and getting the formulation closer to breast milk are the key elements. With plant-based ingredients in infant formula, this cannot always be met. It is crucial to guarantee that the nutritional composition is met.”

This corresponds to the findings of the DSM report. For older children aged 3-12, “moms of kids are on the lookout for all-natural ingredients (76%), added nutrition (72%) and no preservatives (70%) in products.” Additionally, they were seeking essential vitamins such as vitamin A, C, D and E, calcium, iron, fiber, omega 3 and probiotics.

Mothers of babies and toddlers seek formula that claims immune health support (30%) with balanced nutrition (33%) and reassurance that the product will be gentle on a baby’s stomach (16%), the report notes.

Market trustOther infant formula players may enter the market as a result of the US formula shortage.
Additionally, mothers are turning to healthcare professionals for nutritional advice before purchasing products, as they trust their advice and follow their guidelines. 

“Most appealing attributes are the best quality, highest levels of vitamins/minerals, scientifically/clinically proven, and ease of digestion are appealing to moms. Digestion is especially appealing to moms in Australia, Vietnam and Russia, whereas the highest levels of DHA/ARA appeal to moms in Indonesia and China,” says Speerstra.

Innova Market Insights revealed in a 2020-2022 report that other trends are high sources of proteins, growing-up milk, brain health, and gut health. Pre- and probiotics, no added sugar, halal and gluten-free products were highlighted, especially for the Asia Pacific region.

Impact of US formula shortage
The US infant formula shortage mainly affects the market in that nation. “Specifically specialty infant formulas,” Speersta notes.

“The shortage highlights supply risks and safety issues to be addressed not only in the US but also in other markets.” 

“Trust will be an important factor in reassuring parents who are concerned about the safety of food and milk. The current supply situation provides positive momentum to new US brands which, for instance, focus on organic or clean labels. Next to that, we also see an increased interest for sustainable and natural solutions,” Speersta concludes.  

“The US infant formula shortage might open the door for other infant formula players to enter the US market, where “entry barriers are too high” and “competition is too great” for new formula makers to stand a chance in the past,” says Boon Wong.

By Beatrice Wihlander