Global: Consumer Staples
China infant formula data: No sign of share improvement for Danone
Danone share remains at 4% with no sign of improvement
The latest Nielsen data for China infant formula suggests Danone had a 4.2% market share over Jan/Feb, a small deterioration from the last data point (4.3%) for Nov/Dec. Nielsen data only tracks large retailers in tier 1 and tier 2 cities, and therefore only measures a small proportion of modern retail while also not capturing several important channels such as internet retailing, mother and baby stores, and cross-border. We believe the non-tracked channels are taking share of the overall market and we also believe that Danone’s share within these channels has been more resilient than in modern retail due to its focus on the more premium end of Danone’s infant formula brands. However, the lack of improvement in the latest Nielsen data suggests that the division has not yet begun to improve the performance of its main China infant formula brand, Dumex. On the 4Q13 results conference call, Danone management indicated that its overall share of infant formula (all channels) was c. 14% for December, having recovered from 12% in October.
MJN gains share with lower average pricing
Mead Johnson Nutrition (MJN) gained a further 292 bp of share vs. the Nov/Dec data to record a 2-year high in terms of market share, as average prices declined 4%, the 10th consecutive month of declines (more than any other brand), boosted volume growth.
Amidst eight consecutive months of industry sales decline
For the 8th consecutive month, the infant formula market has been in decline (-9%) in the Nielsen tracked channels, following contamination allegations and industry probes into price fixing and bribery. Danone has faced the brunt of these issues with sales declines of 74% yoy in Jan/Feb while Mengiu and Nestle/Wyeth have achieved double-digit growth.
Pricing slows across the market – Nestle most robust
The infant formula market has witnessed slowing average price increases over the last 12 months from 8.5% growth in March/April 2013 to 3.5% in Jan/Feb 2014. Of the large-cap companies in China, Nestle/ Wyeth has withstood this trend better than most, while MJN has had the largest average price declines over the period.