The impact of China’s declining birthrate is shifting from a public sector concern to a private market headache.
Despite efforts to boost record low fertility rates in one of the most populous countries on Earth, last year Deaths exceed births Came to China for the first time in six years.
Now the fallout from that shift is spreading to businesses, with Nestlé closing an infant formula factory amid a dwindling number of newborns in China.
“External trends have greatly affected the demand for infant nutrition products in Greater China. The number of newborns in China has A sharp decline From about 18 million per year in 2016, it is expected to be less than 9 million by 2023. ” Nestlé is the world’s largest food company and the conglomerate behind brands such as Kit Kat and Nescafé. Wednesday announcement.
Nestlé has one exist in large numbers China’s infant formula market is worth billions of dollars. But in recent years, as more and more Chinese companies have gained a foothold, the industry has also faced fierce competition.
“Markets that were previously reliant on imported infant formula are now seeing rapid growth in locally produced products,” Nestlé said.
The company plans to close its plant in Askeaton, Ireland, which it has produced exclusively for the Greater China and Asian markets since acquiring the plant in 2012.
The company plans to close the plant in early 2026 and move infant formula production to existing plants in Suzhou, China, and Konolfingen, Switzerland.
A Nestlé spokesperson told reporters that around 542 employees were recruited at the Asketon factory and that Nestlé planned to start a “consultation process” with them. wealth.
The Smart Bean maker has been looking for a buyer for the factory but has yet to find one.
Irish Minister for Enterprise, Trade and Employment Simon Coveney reportedly said the news was “very disappointing” British Broadcasting CorporationIt added that the government intends to provide full support to affected employees.
Get ready for weight loss pills Influence
Nestlé’s announcement of the plant closures came as the company reported results for the first nine months of the year that missed expectations.
The Swiss giant reported sales of approximately $76.6 billion during the period, marking a Growth 7.8%–Missed the consensus estimate of 8.1%.
Nestlé said its prices rose 8.4% in the first nine months of 2023 due to “historic input cost inflation”, which could hurt sales as consumers cut back on spending amid rising retail prices.
“(Sales) growth is driven by pricing as we continue to deal with historic inflation levels. Our sales and product mix are recovering,” Nestlé Chief Executive Mark Schneider said on Thursday.
The rapid popularity of drugs that suppress appetite to aid weight loss is also putting pressure on food and beverage companies as consumers reduce their food intake.
Nestlé is preparing to counter the impact, producing products to supplement users of medications such as Wegovy and Ozempic, made by Novo Nordisk.
“When you eat less, you have certain requirements for vitamins, minerals and supplements,” Schneider told Bloomberg. “You want to make sure weight loss is supported. You want to make sure you limit the loss of lean muscle mass.”
While other food and drink retailers, including Walmart in the U.S., have noticed the rise of weight-loss drugs taking a toll on sales, Nestlé said it has never seen It also hurt its business.
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