The total number of new births is declining, and the infant milk powder industry is approaching an inflection point?

 

　　According to the figures released by the National Bureau of Statistics, the birth population of our country in 2018 was 15.23 million, a decrease of 2 million compared with 2017, and a new low in recent years. The impact of the decline in the total number of new births in 2018 has begun to be gradually reflected in the market. The reporter's survey found that the sales of milk powder in the mother and baby channel have been affected. The industry forecasts that due to the continued decline in the number of new births, the rapidly growing infant milk powder industry is facing an inflection point, and the stock market competition will be more brutal. Milk powder companies have also begun to adjust their strategies.

 

　　Difficult milk powder business

 

　　For many milk powder distributors, the first five months of this year have felt the chill in the market.

 

　　"The number of customers is decreasing, and it is obvious that sales have become difficult." Ma Jun, a milk powder distributor in a prefecture-level city in Shandong, told First Financial Reporter that since 2019, the sales of a period of milk powder have declined the most significantly. In order to reduce capital occupation, he gave up some brands and left better-selling big brands.

 

　　But Ma Jun's anxiety has not lessened. In his opinion, the gross profit of small and medium-sized brands is as high as 50% or more, while the gross profit of big brands such as Feihe is only 10% to 15%. Plus a percentage point of cost support, although the business flow is not low, it may not earn more than before.

 

　　The first reporter learned in an interview that in 2019, the business of many mother and baby stores declined significantly compared with the same period in 2018, while the rent and labor costs of stores, as well as marketing and promotion expenses, were still rising, which also led to difficulties in store operations. A dealer revealed that in the Shandong market he is responsible for, 2 to 10 small regional chain mother and baby stores have begun to shrink or close stores, and it is expected to be more serious in the second half of the year.

 

　　For the sudden decline in business, the channel attributed the reason to the decline in demand caused by the decrease in the number of births in 2018. According to the figures released by the National Bureau of Statistics, the number of births in our country in 2018 was 15.23 million, a decrease of 2 million compared with 2017, and a new low in recent years.

 

　　Super large mother and baby chain enterprises also feel the same.

 

　　Love baby room (603214.SH) released a quarterly report shows that the quarterly income of 550 million yuan, an increase of 13.21%, which accounts for half of the milk powder business income of 260 million yuan, an increase of 18.7%, while the growth rate of milk powder business in 2018 was 29.8%, compared with the same period in 2018, the growth rate of milk powder business in the first quarter also fell by 7.2 percentage points.

 

　　In this regard, Tang Pukuo, representative of securities affairs at Love Baby Room, said that there are many reasons for the slowdown in the growth rate of milk powder business. The decrease in newborns will definitely have an impact objectively, but it is difficult to quantify the impact.

 

　　Is the industry turning point approaching?

 

　　The market size of infant formula milk powder is closely related to the total number of newborns. In recent years, the continuously liberalized birth policy has gradually pushed up the number of newborns, and also strengthened the baby powder market in China.

 

　　Reporters access to information found that since the relaxation of the two-child policy in 2011, the annual increase in the domestic population has been continuously pushed up. About 16 million - 16.50 million, after the implementation of the comprehensive two-child policy in 2015, the total number of births in 2016 rose rapidly to 17.86 million, a new high since 2000. The figure in 2017 has declined, but it still reached 17.23 million. According to the "China Fertility Report 2019" released by Evergrande Research Institute, from 2013 to 2017, the proportion of two children in the new population increased from 31.1% to 51.3%.

 

　　But in 2018, the situation gradually began to change.

 

　　Recently, a report released by the Shaanxi Provincial Bureau of Statistics shows that the number of women during the fertility boom in 2018 is also decreasing year by year. On the other hand, the higher cost of childcare has also reduced the family's willingness to have children.

 

　　Huatai Securities analyst Liang Zhonghua pointed out that due to factors such as fertility willingness and the reduction of women of childbearing age, the total number of new births in 2019 is expected to fall to 14 million, and the probability of falling below 13 million within 5 years.

 

　　Independent dairy analyst Song Liang told First Financial Reporter that there is a lag in the impact of the reduction in the number of newborns in the milk powder market. One-stage milk powder is mainly aimed at infants aged 0-6 months, so the performance is relatively obvious. Three-stage milk powder, the main profit product of milk powder companies, is aimed at infants and young children aged 18-36 months, and its impact has not yet been reflected. If according to the current forecast for the number of newborns in the future, the baby powder business will face an inflection point in the industry.