Albany, NY -- (SBWIRE) -- 04/11/2013 -- In 2010, the production capacity of infant formula milk powder was 800,000t in China; this number increased to 1 million tons in 2011 and 1.1 million tons in 2012, increasing by 100,000t in 2012 and the growth rate was 10%. From 2010 to 2012, the production capacity utilization of infant formula milk powder in China had both rise and fall, were 70.00%, 83.10% and 74.45%, respectively.

In 2010, due to lower consumer confidence in domestic dairy, imported infant milk powder posed great impact on the domestic dairy products. Seen from the national statistics, the output of domestic infant milk powder showed a significant decline for the first time in recent years, down about 12%. According to statistics, the supply of infant milk powder in China reached about 560,000t in 2010, and the foreign brands had occupied almost a half of the number.

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According to consumer group, the consumption of infant milk powder accounts for more than 60% of the milk powder industry. In 2011, the output of infant formula milk powder was 831,000t in China. In 2012, the output reached to 819,000t, down 1.44% over 2011.

At present, the domestic dairy producers continue to increase the production of infant formula milk powder; the market supply of infant formula milk powder will continue to maintain growth momentum. Huidian Research forecasts that the market supply growth rate of infant formula milk powder will be not lower than 10% in China in 2013-2017. Therefore, the market supply of infant formula milk powder will be about 900,000t in 2013, and this number will exceed 1.3 million tons in 2017.

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Each year, China has 16~18 million new born babies, among which only 67% of 6 month
old babies are breast fed, and the number of birth to 3 year old babies is over 70 million. The sales volume of infant and young child formula milk powder has been increasing by over 10% annually in China. China has replaced the US and become the biggest infant and young child formula milk powder (hereinafter referred to as infant milk powder) consumer in the world.

The Melamine Incident in 2008 resulted in a big change in brand market shares of the Chinese infant milk powder market. Many foreign brands like Nestle, Wyeth, Dumex and Mead Johnson successively set up plants in China. Presently, foreign brands cover over 60% of infant milk powder market share and over 80% of high-end infant milk powder market share in China.

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In terms of the current dairy products with large commercial scale and profitability, infant formula milk powder is undoubted focus and hotpoint of industrial competition. According to the preliminary estimation of BOABC, currently the sale gross profit margin of foreign-funded infant formula milk powder brands represented by Mead Johnson and Dumex has reached 60%, and that of domestic infant formula milk powder brands represented by Yili, Beingmate, Shengyuan and Yashili has also reached 40-60%, which far exceeds 25% average gross profit margin of the entire dairy production industry, and attracts a large number of milk processing enterprises to turn to produce infant formula products, meanwhile, the capital outside the industry also saw the tremendous profits of the product, and has made strong capital penetration to the product. In recent years, infant formula milk powder companies have got listed in and outside China, and have obtained a wealth of capital, so they have made the formula milk powder to become one of the products with the highest investment value.

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