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Organic farming began in China in the late 1980s, and since then it has developed into a regulated sector. China's organic farming sector is fuelled by increasing demand for exported products and local demand for organic packaged food products.
Rising disposable income coupled with increasing awareness about the benefits of consuming organic food products has led to the growth of the organic food industry in China.
This trend is also visible in the Chinese baby food market, as more and more parents are explore the benefits of organic baby food products. The organic baby food market in China was anticipated to be worth US$ 679.4 Mn in 2014, and Future Market Insights estimates it to reach US$ 2.1 Bn in 2020.
Among the various organic baby food products available in the market, the demand for milk formula and dried baby food is anticipated to be robust. These two product categories accounted for over 54% of market share in 2014. FMI estimates that by 2020, their market share will go up to 57%.
The organic food industry has received tremendous support from the Chinese government. Vegetable Marketing Organization, a government body, recently promoted organic products by organising an event and seminar. The Certification and Accreditation Administration of the People's Republic of China (CNCA) closely monitors the organic food quality.
Although the organic baby food market in China is projected to expand steadily in the near future, FMI's analysis found a few caveats. The 2008 milk scandal is still fresh in people's memory, and many foreign importers are wary of associating with Chinese firms.
FMI's analysis on the China organic baby food market found that demand for these products is only limited to major cities. Consumers in rural areas have little or no awareness about organic baby food products. High cost remains a barrier for a vast section of population; baby food products with artificial ingredients are not only competitively priced, but also available in a wide range.
China Organic Baby Food Market: Consumer Profile & Behaviour
FMI's analysis found that most of the demand for organic baby food in China came from consumers who are financially well-off. These consumers can be broadly segmented into four groups - business people, overseas returnees, foreigners living in China, and young urban couples.
Business people: This consumer segment is characterised by higher-than-average per capita income. Consumers in this segment are proactively looking at buying safe products, and they have the means to pay for this.
Overseas returnees: According to Project Atlas, nearly 275,000 students were enrolled in public and private institutions in the US. A large number of Chinese students go to Europe, Canada, and Australia for higher education. Upon returning, these students take up jobs in China's urban centres. Awareness about the benefits of organic products is high among this segment.
Foreigners living in China: Foreigners living in China are an important consumer segment for the organic baby food market. South Korea and USA account for the bulk of the population in China and this consumer segment accounts for a sizable percentage of demand for organic baby food products.
Young urban couples: Urban couples in big cities of China are another important consumer segment for organic baby food market. This consumer segment mainly works in multinational companies and public administration, and owing to relatively higher educational and disposable income, they demand safe products.
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