(Yicai Global) Jan. 17 -- China's infant formula market is predicted to continue contracting after the statistics bureau revealed dismal birth rate data for last year. 

Shares of big infant formula brands fell after the announcement. China Feihe [HK: 6186] declined by 2 percent to HKD7.96 (USD1). Ausnutria Dairy [HK: 1717] dropped 1.7 percent to HKD4.15. Health and Happiness H&H International Holdings [HK: 1112] closed unchanged at HKD16.08 (USD2.10).

China had 9.6 million new babies in 2022 while the number fell for the sixth straight year to be almost half of that of 2016, the National Bureau of Statistics revealed today.

The continued decline of newborns in 2022 was expected, Song Liang, an independent dairy industry analyst, told Yicai Global. The scale of the domestic milk powder market will keep narrowing even though the data are better than predicted, Song added.

The impacts will gradually emerge in the next two years and manufacturers will face more growth pressures, Song said. As the market scale contracts, milk powder firms are expected to increasingly compete for existing customers, per market insiders. One-third of brands are predicted to disappear as the national milk powder standards are revised this year so future growth will be shaped by market concentration.

This year, China's dairy product market may improve from last year, when it remained sound despite economic pressures, as consumption is set to recover gradually with changes in the Covid-19 situation, said Yan Weibin, chairman of Ausnutria Dairy. But the infant formula segment will remain in a bottleneck period, he added.

Editors: Liao Shumin, Emmi Laine, Xiao Yi