Despite a history of counterfeits and safety problems, the infant formula sector is seeing a China boom. Major formula companies recently reporting China sales improvement include Mead Johnson and Nestlé, while Danone logged 50% China sales growth for Q3 of this year.
L2’s recently published Digital IQ Index: CPG China finds that infant formula brands have the highest digital intelligence out of any CPG product category in China. The top brand in this year’s ranking is Friso, which achieved a high share of shelf on e-tailers and invested heavily in sampling campaigns on China’s parenting community sites and popular baby apps.
China’s baby formula industry is still not free from scandals. It suffered a public image setback when China’s food safety regulator discovered a factory producing fake Beingmate and Similac formula in 2016. Brands have responded with digital solutions: several formula makers including Beingmate and Friso created WeChat functions to verify product authenticity, including programs that scan package QR codes or allow consumers to enter the serial number.
Brands also work to earn consumers’ trust on WeChat was through its new mini-apps feature. Wyeth’s mini-app asks expecting mothers to upload their medical reports for personalized advice, while Mead Johnson created a mini-app with parenting video tutorials.
Formula brands also rely on celebrity testimonials to boost confidence in their products. Illuma enlisted actor Bai Jingting for a Tmall livestream in which he visited a farm to show the origin of the milk used for the brand’s formula. The celebrity is one of the young male celebrities referred to as “young fresh meat” in China, or xiao xian rou (小鲜肉), who are known for their attractiveness and ability to generate high social engagement from their female followers. The video drew 26 million likes and included a link to purchase its Stage 3 formula, which tripled its sales after the broadcast.
Several factors are believed to be influencing the uptick in baby formula sales in China, including an 8% rise in births after China relaxed its one-child policy, as well as official government approval of certain brands in the wake of tightened regulations. The industry is a volatile one, however, with no guarantee that future counterfeit scandals won’t occur in the future. As a result, brands are investing big in digital, which is one thing they can control in an uncertain market.