Infant Formula Ingredients Market Competitive Dynamics & Global Outlook 2019-2025

The global infant formula ingredients market is estimated to be valued at USD 16.7 billion in 2019. It is projected to reach USD 25.5 billion by 2025, recording a CAGR of 7.3% during the forecast period. Infant formula ingredients are used in the production of safe and highly nutritious formula solutions that facilitate growth and development in infants. Various ingredients used in infant formulas include carbohydrates, proteins, vitamins, minerals, oils & fats, and prebiotics. These ingredients are available in powdered and liquid & semi-liquid forms.

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Drivers: Extensive R&D by companies operating in the infant formula ingredients market

Manufacturers involved in the infant formula ingredients market are consistently engaged in R&D to develop ingredients as per consumer expectations. In 2019, Nestlé (Switzerland) opened a new R&D center in Ireland. The company made an investment of USD 30.0 million for the same. The center will focus on developing products for infant nutrition. Arla Foods amba (Denmark) invested USD 0.66 million for a project focusing on infant formula. The project aimed at investigating whether a diet with bioactive milk ingredients protects against gut inflammation, which is of huge relevance to improve infant formula. BASF (Germany) and GlycoSyn (US) formed a partnership with a focus on the area of infant nutrition. It involved the development and commercialization of human milk oligosaccharides (HMOs). In 2019, BASF launched its first HMO, PREBILAC 2'-FL, for the infant nutrition market. Thus, the infant formula ingredients market is highly competitive, with a large number of key players involved. Most of these players are expanding their customer base, owing to its increased demand from various countries.

Restraints: Strict regulations for infant formulas in China

In 2008, melamine, an industrial chemical used for making plastic, was found in infant formulas in China. Melamine has a higher protein content but can cause kidney stones. It was found in over 22 Chinese dairy companies. It was reported that over 300,000 babies were sick and caused a few fatalities in the same year. This led to a distrust for local manufacturers among consumers in the country and affected the sales of domestic manufacturers since then. Post this incident, a constant reform is being made for the supervision of the infant formula industry. The country has tightened its infant formula registration process. This is expected to create a hindrance for international players to penetrate the local market in the years to come.

Opportunities: Shift in preference for plant-based infant formula ingredients

The expanding infant formula market has led to increased demand for innovative plant-based infant formulas. Many vegan and vegetarian communities opting for plant-based alternatives are extending their diets to their babies as well, creating a lucrative opportunity for plant-based infant formula manufacturers. For example, soy-based protein infant formulas are known for their high-protein content and used for non-dairy infant formula products, providing a suitable alternative to lactose-intolerant babies. For infants with soy allergies, Israel-based Else Nutrition (Israel) is developing 100% plant-based dairy and soy-free infant formula using almonds and buckwheat. Another alternative for both soy and dairy allergenic infants are lentils. Lentil-based formulas are expected to serve as a suitable alternative, owing to their high protein content and amino acid profile. PROTEIN2FOOD (Denmark) formed a partnership with Fraunhofer Institute to develop a model infant formula prototype (in powder form) with a well-balanced protein (amino acid) profile. Thus, plant-based infant formula ingredients stand high-growth prospects in the years to come.

Challenges: Cases of contamination found in infant formulas

In the past, traces of melamine were found in infant formulas in China and the US. This has negatively affected the growth prospects of the infant formula ingredients market. In another incident, in 2018, a Slovenian consumer found dead insects in Danone's infant formula. The Ministry of Health in Slovenia recalled the affected batch from stores across the country. The agency advised consumers who had purchased the product not to use it and to return it to the seller or discard it. In another incident, in Singapore, the Agri-Food and Veterinary Authority (AVA) of Singapore detected Cronobacter sakazakii bacteria in the samples of Dumex Mamil Gold Infant Milk Formula. Cronobacter sakazakii is a bacterium found in the environment; it can survive dry conditions, such as in food like infant formula and powdered milk. It is known to cause meningitis or sepsis in newborns.

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North America is projected to reach USD 2.8 billion during the forecast period.

In 2019, The infant formula ingredients market in North America is driven by the US. The presence of key infant formula manufacturers, such as Mead Johnson Nutrition (US), Abbott Laboratories (US), and Nestle SA (Switzerland), has significantly contributed to the growth of the infant formula ingredients market. The growth rate of organic infant formulas is expected to be higher than that of regular infant formulas in the country since the demand for natural ingredients has increased in recent years. The infant formula market has opened up opportunities for the ingredients sector, due to the growing demand for goat milk-based infant formula prompting manufacturers to introduce new and innovative ingredient products in the market.

The key players in this market include AAK AB (Sweden), Carbery Food Ingredients Limited (Ireland), Fonterra Co-operative Group Limited (New Zealand), Royal Friesland Campina N.V. (Netherlands), BASF SE (Germany), Sachsenmilch Leppersdorf GmbH (Germany), Koninklijke DSM N.V. (NetherlandsChr. Hansen Holdings A/S (Denmark), ), Arla Foods amba (Denmark), Kerry Group plc (Ireland), Glanbia plc (Ireland), Vitablend Nederland B.V. (Netherlands), and Lactalis Ingredients (France).

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