Early Life Nutrition: Baby Food and Formula Opportunities in Asia

The baby food market in Asia Pacific has been shrinking as milk formula consumption falls, causing manufacturers and brands to seek new growth opportunities. From comprising 82% of the region’s total baby food retail sales in 2024, milk formula is expected to make up only 79% by 2029.This decline is largely due to China, where immense losses are expected to rack up a total of USD4.8 billion between 2024 and 2029.

China’s current 65% share of total baby food retail sales in Asia is predicted to drop to 56% by 2029

^{Source: Euromonitor International}

Building a presence in other key markets such as India (predicted to grow by a 6% CAGR in retail value sales terms between 2024 and 2029), Indonesia (3% CAGR), and the Philippines (3% CAGR) will help brands balance out their performance in the region.

Innovation focuses on underserved health needs

Milk formula manufacturers are focusing on innovations with science-backed nutrition benefits to complement mother’s milk across more health claims, formats and a wider range of children’s ages. Holistic products with multiple functional benefits have been introduced to the market, such as reformulated Nan Infinipro launched in November 2023 in Hong Kong. It contains six human milk oligosaccharide (HMO) complexes and two probiotic strains that claim to support both digestive and cognitive health.

There is also demand for premium options, such as solutions that prevent or treat allergies to regular milk formula, and organic milk formula.

Special baby milk formula is predicted to buck the decline in Asia Pacific between 2024 and 2029, with a 1% retail value CAGR forecast

^{Source: Euromonitor International}

Brands like Hipp, for instance, are increasingly popular in markets like South Korea and the Philippines; in the latter, Hipp communicated that its Organic CS Kindermilk specially benefits caesarean section-born children above three years old.

Movement towards mimicry of adult food in non-formula

To provide value to consumers, brands must understand the different ways consumers enjoy their meals in each market and also local flavour profiles. This goes hand in hand with supporting weaning practices by parents, who are keen on introducing food similar to adult food in early childhood.

Baby food excluding milk formula is predicted to grow at a 1% CAGR in retail value terms between 2024 and 2029. Dried baby food is set to lead overall regional growth (2% retail value sales CAGR), but this is due to select markets. Vietnam, for instance, leads the region in terms of the proportion of dried formats in baby food (93% of the market in retail value sales terms in 2024). Dried formats are already common among the general populace, as seen in dried ready meals (32%). In contrast, dried baby food is unlikely to take off in South Korea where dried ready meals are negligible.Whilst markets like India and Indonesia are set to lead dried baby food growth at 7% and 6% retail value CAGRs, respectively, prepared baby food will likely land more effectively in markets like Thailand (6% CAGR) and South Korea (5%).

Expand to the rest of the family nucleus

As falling birth rates cause the overall baby food market to shrink in the period to 2029 (declining by a 2% retail value sales CAGR from 2024), brands are seeking ways to add value for Asian families as a whole. In fact, barring China and Thailand, low fertility rates in Asia tend to correlate to a higher average age of women at childbirth. Women reaching motherhood at different ages adopt different attitudes and approaches towards health and spending, not only for themselves but for their families.

Attention to the wider family nucleus encourages the diversification of baby food companies’ portfolios into powder milk for older children and adults. This has made smaller baby food players drop out of the market or reduce their share as they turn to new revenue streams.

The top three companies in Asia Pacific’s milk formula market collectively hold a 41% share in 2024, a steady increase from 36% in 2019 and 28% in 2015

^{Source: Euromonitor International}

Whilst Danone and Nestlé draw sales from various Asian markets, Feihe’s single market focus makes it more vulnerable to China’s falling birth rates and declining milk formula consumption, and the company is among others that are seeking new consumer groups to maintain value growth.

Moving ahead, the baby food industry must be prepared to innovate more strategically, targeting more niche health needs and aligning them with local lifestyle preferences. Adapting to the habits of the wider family will also gain them resilience and a stepping stone ahead of the intensifying competition.

Learn more about trends in baby food and what’s driving the overall dairy market in our report, World Market for Dairy Products and Alternatives.