China infant formula demand remains under pressure: offline down 8.2% YoY in Mar-Apr, online down 19% YoY in May

Overview

This report is a channel data update by Goldman Sachs on the China infant formula market, mainly using Nielsen offline data and Tmall/Taobao/JD online sales tracking, covering offline performance in March-April 2026 and online performance in May. The report believes overall industry demand remains weak, with the decline in offline sales mainly driven by lower volume, and online channels weakening further under the drag of JD's high base, while brand performance shows clear divergence.

Core views

The core views include: first, the offline market remains in contraction, with sales down 8.2% YoY in March-April, volume down 9% YoY, and ASP up only 0.9%; second, Yili returned to positive growth in offline channels and outperformed the industry, while Feihe's decline narrowed versus January-February but remained weaker than the market; third, the combined share of large domestic players was broadly stable, while leading MNC brands saw share edge up to 23.8%; fourth, the online market declined 19% YoY in May, with JD down 26% as the main drag, while Tmall/Taobao was relatively more stable; fifth, Aptamil, Bellamy's, and Biostime relatively outperformed in some online metrics, while Firmus, A2, Nutrilon, and Wyeth relatively underperformed.

Analysis framework

The report assesses industry momentum through channel splits, brand YoY growth, market share, and the split between volume and ASP, comparing offline data for March-April with January-February and online data for May with April. The offline section covers modern trade (MT) and mother & baby stores (M&B), while the online section covers Tmall/Taobao/JD, and compares the relative performance of major brands such as Feihe, Yili, Mengniu, Danone, A2, and Biostime.

Methodology notes

• Channel sales trackingNielsen IMF offline data

  Uses sales value, volume, ASP, and share across MT and M&B stores to measure the offline infant formula market in China.

  The report notes that Nielsen data were rebased starting from May-June 2024, so YoY and sequential comparisons should follow the report's stated basis.

• E-commerce sales trackingCombined online tracking of Tmall/Taobao/JD

  Uses monthly sales changes across major e-commerce platforms to assess online channel momentum.

  The report splits Tmall/Taobao and JD separately, noting that combined industry online sales fell 19% YoY in May, with JD down 26% YoY and affected by a high base.

• Omni-channel comparisonOmni-channel metric combining online sales and Nielsen offline sales

  Combines tracked online sales with Nielsen offline sales to evaluate brand-wide sales trends across all channels.

  Under this metric, Feihe's omni-channel sales fell 24% YoY in March-April, while Yili's fell 2% YoY in March-April.

• Valuation methodologyP/E target price method

  Derives 12-month target prices using target P/E multiples, discounting, or relative premium assumptions.

  Feihe's 12-month target price of HK$3.43 is based on 11.0x 2027E P/E and discounted back to mid-2027 using 10.3% COE; Yili's 12-month target price of Rmb35 is based on 18.9x 2026E P/E.

• Factors and relative comparisonGS Factor Profile

  Uses growth, financial returns, valuation multiples, and composite percentiles to compare stocks on a relative basis.

  The report states that this framework uses Goldman Sachs analyst forecast data to compare stocks against the market and sector peers on various attributes.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China Feihe Ltd.

  One of the leading players in China's infant formula market; the report lists it as Neutral.

  Strengths

  Offline market share rose to 21% in March-April, up 0.4pp from January-February; the online decline narrowed significantly versus April.

  Weaknesses

  Offline sales fell 12% YoY in March-April, still weaker than the industry's -8.2%; omni-channel sales fell 24% YoY.

  Comparison

  Weaker than Yili, but improved versus its own decline in January-February.

  Risks

  Birth numbers coming in below expectations, intensified competition, slower-than-expected premiumization growth, food safety incidents, and less-than-expected policy support.

• Yili Industrial

  A leading dairy company in China; the report lists it as Buy.

  Strengths

  Offline sales grew 1.9% YoY in March-April, significantly outperforming the industry; M&B channel sales grew 2.8% YoY; 12-month target price Rmb35.

  Weaknesses

  Combined online sales including Pro-Kido fell 17% YoY in May, weaker than the 10% decline in April; ASP was still down YoY.

  Comparison

  Clearly outperformed Feihe and the overall industry in offline channels, but online momentum weakened sequentially.

  Risks

  Slower-than-expected premium demand for liquid milk, slower-than-expected recovery in dairy demand, and intensified industry competition.

• Mengniu Dairy

  A Chinese dairy company, disclosed as Buy in the report; discussed separately in IMF offline data excluding Yashili.

  Strengths

  Offline sales grew 10% YoY in March-April, still maintaining positive growth.

  Weaknesses

  Growth slowed significantly from +36% in January-February; Mengniu lost share sequentially among large domestic players.

  Comparison

  Growth was better than the industry overall, but sequential momentum weakened versus the earlier period.

  Risks

  Further decline in offline share, weak industry demand, and rising competitive and promotional pressure.

• The a2 Milk Co.

  An international infant formula brand, disclosed as Buy in the report.

  Strengths

  M&B channel sales grew 2.9% YoY in March-April, with share rising to 4.3%, up versus both January-February and YoY.

  Weaknesses

  Combined Tmall/Taobao/JD online sales fell 25% YoY in May; the report mentions this may be related to supply reductions since April.

  Comparison

  Offline mother & baby channel performance was better than the industry, but May online performance was weaker than Aptamil, Bellamy's, and Biostime.

  Risks

  Continued supply constraints, online sales volatility, a high base, and intensified competition.

• Biostime/H&H

  An infant formula brand, with H&H listed as Not Covered in the report.

  Strengths

  Offline sales grew 22.4% YoY in March-April, and combined online sales grew 25% YoY in May, outperforming the industry.

  Weaknesses

  Offline share fell from 7.8% in January-February to 7.5% in March-April, and growth slowed versus the previous period.

  Comparison

  Growth was higher than the industry and most peers, but share performance indicates competitive pressure remains.

  Risks

  Further share decline, increased promotional intensity, and changes in channel mix.

• Aptamil/Danone

  MNC infant formula brands and an important component of the report's analysis of leading international brand share changes.

  Strengths

  Aptamil's combined online sales grew 6% YoY in May; Danone's offline share reached 5.8% in March-April, up 0.2pp from January-February and 0.6pp YoY.

  Weaknesses

  Overall MNC brand performance was mixed, and online growth slowed versus April.

  Comparison

  Combined offline share of leading MNC brands rose to 23.8%, up 0.3pp from January-February.

  Risks

  High base effects, weak consumer demand, competition from domestic brands, and pressure from channel expenses.

• Junlebao/Ausnutria

  Domestic China infant formula-related brands, used in the report to show the performance of other players.

  Strengths

  Junlebao's decline narrowed versus January-February.

  Weaknesses

  Junlebao's offline sales fell 22.3% YoY in March-April, while Ausnutria fell 28% YoY, both significantly weaker than the industry.

  Comparison

  Both underperformed the industry's -8.2% offline run-rate and were also weaker than relatively better-performing brands such as Yili and A2.

  Risks

  Share loss, channel inventory and competitive pressure, and weaker-than-expected parent company integration.

Key data

• Offline IMF market sales-8.2% YoY in March-April 2026Weaker than -7.7% YoY in January-February 2026.
• Offline volume and ASPVolume -9% YoY; ASP +0.9% YoYVolume remains the main drag on the decline in offline infant formula sales.
• Mother & baby stores and modern tradeM&B about -7.3% YoY; MT -20% YoYThe decline in modern trade was steeper, while the mother & baby channel showed relatively stronger resilience.
• Online IMF marketCombined Tmall/Taobao/JD -19% YoY in May 2026April was -14% YoY; in May, Tmall/Taobao was -2% YoY and JD was -26% YoY.
• Feihe offline performance-12% YoY in March-April; 21% shareThe decline narrowed from -15% in January-February, but it still lagged the industry's -8.2% run-rate, while share rose 0.4pp versus January-February.
• Feihe online performanceCombined Tmall/Taobao/JD -31% YoY in MayThe decline narrowed from -47% YoY in April; under the Tmall/Taobao metric, May was +1% YoY.
• Yili offline performance+1.9% YoY in March-AprilAbove the industry's -8.2%, mainly driven by +2.8% YoY growth in the M&B channel.
• Yili online performanceCombined including Pro-Kido -17% YoY in MayApril was -10% YoY; under the Yili-only metric, May was -23% YoY.
• Large domestic players' shareAbout 62% combinedBroadly stable in March-April versus January-February, with Yili and Feihe gaining share, while Mengniu and Biostime lost share sequentially.
• Leading MNC brands' share23.8%Up 0.3pp from 23.5% in January-February.
• A2 mother & baby channel performance+2.9% YoY sales in March-April; 4.3% shareShare rose 0.2pp from January-February and 0.4pp YoY, mainly driven by +4% YoY volume growth.
• Biostime offline performance+22.4% YoY in March-April; 7.5% shareGrowth was below +25.8% in January-February, and share fell back from 7.8%.
• Main target pricesFeihe HK$3.43; Yili Rmb35Feihe is rated Neutral, and Yili is rated Buy.

Impact & implications

From an investment perspective, it remains difficult to confirm a demand inflection point at the industry level, as low birth rates, declining volume, and channel competition continue to weigh on growth; however, channel and brand divergence provides a basis for stock selection. Yili appears relatively more defensive thanks to its return to positive offline growth and improvement in the mother & baby channel, while Feihe, although its share has recovered somewhat, still saw sales decline more than the industry. A2 and Biostime show relative bright spots in some channels but also face online volatility and supply constraints.

Risks

• Higher- or lower-than-expected birth numbers would directly affect infant formula demand.
• Competition intensity above or below expectations would affect share, pricing, and promotional expenses.
• The pace of growth in premium products could affect the revenue quality of brands such as Feihe, Yili, and A2.
• Food safety incidents in the industry could suppress demand and hurt brand trust.
• Policy support stronger or weaker than expected could change demand and valuation expectations.
• High base effects and traffic changes on online platforms such as JD and Tmall/Taobao could amplify monthly sales volatility.
• If A2's supply cuts continue, online sales may remain under pressure.
• A slower-than-expected recovery in overall dairy demand could affect diversified dairy companies such as Yili and Mengniu.

What to watch

• Whether volume, ASP, and share improve in Nielsen offline data in the subsequent months of 2026.
• Whether declines in the M&B and MT channels continue to diverge, especially whether the MT channel can narrow from around -20%.
• Whether Tmall/Taobao/JD return to growth after 618, and whether JD's high-base impact fades.
• Whether Yili's positive offline growth is sustainable, and whether the online metric including Pro-Kido stops declining.
• Whether Feihe's market share recovery can translate into improved sales growth.
• Whether A2's supply reduction ends, and whether online sales recover from -25% in May.
• Whether the share gains of MNC brands continue, and whether the divergence among Danone, Aptamil, Biostime, and Wyeth/Nestle widens.
• The impact of birth data, industry policy support, and food safety incidents on demand and valuation.