The new national standard formula of milk powder has been adjusted greatly, and a new round of reshuffle of the milk powder industry is coming soon

The milk powder should be changed! The new national standard formula of milk powder has been adjusted greatly, and the dairy enterprise knockout competition has begun

A new round of reshuffle of the milk powder industry is coming.

When the domestic milk powder industry's position is gradually stabilized and strengthened, the market concentration of the milk powder industry will also increase further.
After the National Health Commission issued the new national standard for milk powder on March 19, the milk powder industry Several companies in the industry are happy and a few are worried.

However, under the influence of the sluggish market, even if many dairy companies have released good results in recent days, it is still difficult to conceal the decline of the capital market.

At the close of the market on March 22, a reporter from China Times noticed that in the performance of stock prices, only a few companies showed an upward trend, and the others all declined to varying degrees.

In addition, it is worth noting that according to the "Infant Formula Food" (GB 10765-2021), "Follow-up Formula Food" (GB 10766-2021), and "Children's Formula Food" (GB 10767 -2021) The content of the new national standard shows that, compared with the old national standard (2010 version), the new national standard has made clearer and stricter regulations on protein, carbohydrates, trace elements and optional ingredients.

Undoubtedly, this will bring about changes that cannot be ignored for the industry, and under the influence of the new national standard, which dairy companies will be enhanced, and which dairy companies will be eliminated?

Promote industry concentration

Promote industry concentration

After a long period of brewing for the new national standard of milk powder, the mystery was finally revealed.

From the content of this new national standard, the reporter of "China Times" learned that the main thing is to make precise regulations on nutrient content.
Although the specific implementation time is two years later, for companies, early preparations will give you an early chance of winning.

Specifically, the new national standard adjusts the protein content of follow-up formulas and infant formulas, and increases the requirements for the content of whey protein in follow-up formulas.

In addition, choline is adjusted as an essential ingredient in infant formula and follow-up formula, and selenium and manganese are adjusted to be an essential ingredient in follow-up formula.
In addition, fructose and sucrose should not be used as carbohydrate sources in infant formula, and glucose polymers can be appropriately added (among which starch can only be used after pregelatinization).
For milk-based infant formula, the source of carbohydrates should be lactose.
The carbohydrate content of lactose should be ≥90%).

Regarding the above requirements, industry evaluation believes that the amendments, additions, and changes of nutrients in the new national standard impose stricter requirements on the production technology and research and development of enterprises.

Because the nutrients added to some products are not stable, they may change over time and different detection methods, and even loss in reality, resulting in product content inconsistent with the label, which directly affects the product Quality.
This requires that the nutrients in the company's products meet the standards during the shelf life.

Regarding the implementation of the new national standard, Ausnutria Dairy stated that before the introduction of the new national standard for milk powder, the company had started the procurement of supporting facilities and equipment.

Next, the company will organize relevant personnel internally to conduct a comprehensive and detailed interpretation of the regulatory dynamics, and remind relevant departments to carry out scientific research in accordance with regulatory requirements to meet the requirements of the new national standard and meet consumer needs.
In terms of research and development, the company will use its inherent research and development accumulation, with the help of experts, to develop new product formulas in accordance with the new national standard, and start the preparation of related raw materials.

So if it is implemented at the industry level, what changes will the implementation of the new national standard have? Dairy industry analyst Song Liang said in an interview with a reporter from China Times that the implementation of the new national standard will further increase the market concentration of the milk powder industry.

Because the new national standard puts forward higher threshold requirements for milk powder technology, the development advantages of the industry in the future will be tilted to leading enterprises, and the strong will be the general trend.

In fact, in recent years, as national policies have imposed stricter requirements on dairy companies, industry concentration has gradually increased.

According to a research by Dongxing Securities, in 2016, there were 103 infant formula milk powder manufacturers in my country with a total of nearly 2,000 formulas.
As of June 30, 2020, the number of registered infant formula milk powder product formulas was 1,302, of which domestic production The manufacturers registered 989 formulas, accounting for 76% in China.
In addition, some small-brand companies were eliminated by the market due to increased operating pressure.

Integration advantages are biased towards leading companies

Integration advantages are biased towards leading companies

Looking at the overall trend of the dairy industry, with the health demand derived from consumption upgrades, outdated production capacity will gradually clear up, and industry branding and channel sinking will be a major trend.
In this context, opportunities for domestic brands have increased, especially foreign brand milk powder sales have been blocked during the epidemic, which provides a good opportunity for the rise of domestic brands of milk powder.

And from the recent 2020 financial reports released by major dairy companies, it can be seen that the rise of domestic dairy companies is unstoppable, and the high-end of domestic milk powder has become an obvious development trend and an important growth point for driving performance growth.
.

Ausnutria (01717.
HK) announced its 2020 results show that it achieved revenue of 7.
986 billion yuan, a year-on-year increase of 18.
6%; realized net profit of 1.
083 billion yuan, a year-on-year increase of 15.
0%.
Among them, the company's Hypernuclear Biotechnology, which focuses on the ultra-high-end market, achieved sales of 2.
698 billion yuan in 2020, an increase of 52.
7% year-on-year, becoming the company's fastest growing business unit.

And another domestic dairy company Beinmate also showed in its performance forecast that it will finally turn losses into profits in 2020.
It is understood that Beinmei, which started with baby food, initially entered the mother and baby market with rice noodles, and soon defeated the imported brand that had monopolized the domestic market for many years and became famous in the first battle.

Compared with the leaps and bounds of domestic milk powder, foreign dairy companies are not so happy.
But for Fonterra, the world's largest dairy raw material supplier, it is still full of expectations.
In this regard, Fonterra said in an interview with a reporter from China Times that the company’s performance in the first half of the fiscal year was positive.
The adjusted profit before interest and tax reached 684 million New Zealand dollars, and the adjusted profit after tax reached 418 million New Zealand dollars.
, The group decided to pay shareholders an interim dividend of 0.
05 New Zealand dollars per share, and the forecasted purchase price of ranch raw milk also performed well.

Guosheng Securities believes that the high-end domestic milk powder is accelerating and the potential energy continues to be released.
Domestic milk powder brands have continued to strengthen their competitive advantages in channel intensive cultivation and brand operation efficiency, and the logic of substitution for foreign brands has continued to be confirmed.

The second half of the special powder: can it regain the market share occupied by solid beverages?

Orderly, balanced, and continuous improvement of quality and efficiency and effectiveness will be issues that many companies must face and think about.

The milk powder industry, which has always been growing rapidly, is facing the challenge of the stock market.
Various dairy companies have accelerated their expansion in new market segments in order to seek breakthrough opportunities through dislocation competition.
With the continued advancement of health, people began to pay attention to special The feeding problem of infants and young children, so special medical-purpose infant formula food (referred to as "special powder") has become a new battlefield among major dairy companies.

Special powder is the jewel of the pyramid in the milk powder industry

Special powder is the jewel of the pyramid in the milk powder industry

With the improvement of people's health awareness, people with allergies, premature birth, lactose intolerance, etc.
are continuously being subdivided, and the special food market has shown great development potential to enterprises.

However, in contrast to the huge market demand, there are a few special powder brands.
According to statistics from the Scout Institute, as of September 2020, a total of 55 types of formula foods for special medical purposes have been registered.

The reason why its special powder is not like the many brands of infant powder is mainly related to the high barriers to entry in the special powder industry.

Insiders pointed out: “It takes 3-5 years for special powder to obtain production qualifications from project approval.
Not to mention the number of problems that need to be overcome in R&D and clinical trials.
Just review and approve.
Its registration process and application conditions are better than those of food/health care.
Food is still strict, so many manufacturers are unavoidable to have more than enough energy when faced with the higher application threshold and clinical trials of special powder.
"

It is understood that the research and development enterprises of special powders need to integrate R&D, clinical, registration, production and other processes, and market supervision will also run through the entire process from R&D to production to circulation.

In the "Regulations for the Registration of Formulas for Special Medical Purposes", Article 8 also clarifies: manufacturers that produce and sell formulas for special medical purposes in my country and overseas manufacturers that intend to export formulas for special medical purposes to my country shall have:

①R&D and production capacity compatible with the special medical formula food produced;

②Establish a research and development institution for formula foods for special medical purposes;

③ Equipped with full-time product research and development personnel, food safety management personnel and food safety professional and technical personnel;

④Establish a production quality management system suitable for the food produced in accordance with the requirements of good manufacturing practices;

⑤The ability to inspect all items batch by batch in accordance with the national standards for formula foods for special medical purposes.

In addition, the R&D institution should also have personnel with senior professional titles or corresponding professional abilities in food-related disciplines.

In summary, in the context of high thresholds, few players, and high demand, special fans are undoubtedly an incremental market that needs to be tapped urgently for brands.

But for participating companies, making special powders not only requires a lot of time and money to be invested in it, but also requires a lot of manpower and material resources.
This requires companies to be prepared for a protracted battle, as well as a long-term strategic layout in the field of special powder.

Most of the market share of special powder is monopolized by foreign capital

Most of the market share of special powder is monopolized by foreign capital

Looking at the current pattern of China's special powder market, most of the shares are still concentrated in the hands of foreign brands.

The reason is that foreign companies started earlier than local companies.

According to a research report by Yiou, among the special medical foods approved by foreign-funded enterprises, 81% of the products already existed in the market before the implementation of the special medical food registration measures, such as Nestlé (except for newly established companies in China) All products and all products of Nutricia have been in the market before 2016.

It should be noted that the fact that foreign brands can take the lead in the special powder industry is not due to the lack of domestic brands in my country, but because of two reasons:

1.
Chinese and foreign people have certain differences in the concept of life and health and the concept of disease treatment.
At that time, my country's medical system was not perfect compared with mature markets such as the United States and the European Union.
Therefore, foreign-funded enterprises took the lead in the form of enteral nutrition (medicine).
Entered China;

2.
Prior to 2015, there was no clear definition of special medical food in China until the "Food Safety Law of the People's Republic of China" officially classified special medical food as food, and the "Regulations for the Registration of Formulas for Special Medical Purposes" were launched in 2016.
"From then on, the production and market access of China's special medical foods have been laws to follow, and then the supporting documents related to special foods have been published one after another, so for local enterprises, special powder is a brand new field.

Through the special food registration and filing system, we learned that Shengyuan has launched five special powder products: Youboqirui, Youbominjia, Youboaneng, Youboruian, and Youboqineng, and Meilu has launched Iyounuoyou.
Yili and Aiyou Nuo Kangli two special-approved powder products are catching up with Chinese dairy companies such as Yili, Ausnutria, Yipin, and Beinmate, and the market share gap between the two is gradually being narrowed.

It should be noted that in the past two years, foreign-funded dairy companies have frequently hit the bottom line of our country's laws in the promotion of special powders.

Take Abbott as an example.
In November last year, Abbott’s special medical-use formula "Xiaoansu" published product advertisements on the Douyin platform without censorship, violating relevant regulations of the "Advertising Law" and was supervised by the market in Yangpu District, Shanghai.
The bureau fined more than 1.
94 million yuan and was ordered to stop publishing the advertisements involved and eliminate the impact within the corresponding scope.

In addition, in 2018, Abbott’s other special medical food "Quan Ansu" was also used in publicity including: boosting immunity by 13.
4%, improving muscle strength and quality, reducing average hospital stay by 21%, and reducing average The hospitalization fee is nearly 21.
6%, and the probability of re-admission can be reduced by 6.
7%.
Violation of the advertisements involving disease treatment functions, and the use of medical terms or terms that easily confuse the promoted products with drugs and medical devices were fined 14,000 yuan by the Market Supervision and Administration Bureau of the China (Shanghai) Pilot Free Trade Zone.

This also shows that as a product to improve the nutrition or special dietary needs of special populations, special medical foods have attracted many companies to enter the market, and foreign brands have taken the lead in the Chinese market, but at the same time, the successive fines of foreign brands have made people see clearly.
When it comes, the foreign brands' dissatisfaction and legal awareness in China urgently need to be strengthened.

Whether the special powder can regain the market share of solid beverages

Whether the special powder can regain the market share of solid beverages

Because special medical food is neither medicine, health product, nor ordinary food, it is a powder designed for infants and young children who have special medical conditions such as special disorders, diseases, or medical conditions that cannot meet their nutritional needs through a normal diet.
Or liquid formula food.

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