China infant formula: offline sales fell 8.2% yoy in Mar-Apr, while online sales fell 19% yoy in May, with JD a clear drag

Overview

Based on Nielsen offline data and Goldman Sachs' online channel tracking data, this report updates the performance of China's infant formula market across offline channels in Mar-Apr 2026 and online channels in May 2026, and discusses share and growth changes for brands such as Feihe, Yili, Mengniu, Danone, A2, Biostime and Bellamy's. The overall conclusion is that demand remains weak, with declining offline volumes as the main pressure, while online sales weakened further in May due to the JD channel and a high base.

Core views

The core views are as follows: first, the offline market fell 8.2% yoy in Mar-Apr, with volume down 9% yoy and a slight increase in ASP insufficient to offset volume pressure; second, combined online sales across Tmall/Taobao/JD fell 19% yoy in May, with JD's 26% yoy decline as one of the main drags; third, Feihe's offline decline narrowed but still lagged the industry, and its market share rebounded sequentially to 21%; fourth, Yili returned to positive offline growth and outperformed the industry, but online momentum weakened sequentially; fifth, some brands such as Aptamil, Bellamy's and Biostime outperformed relatively online, while Firmus, A2, Nutrilon and Wyeth were weaker.

Analysis framework

The report combines Nielsen offline channel data with Goldman Sachs-tracked Tmall/Taobao/JD online sales data, breaking down infant formula performance by channel, brand, volume, ASP and market share, and comparing key listed companies against the industry trend.

Methodology notes

• channel trackingNielsen offline market data

  Tracking sales of infant formula across modern channels and mother-and-baby store channels

  The report uses Nielsen data to track offline infant formula market sales, volume, ASP and share changes, and notes that the Nielsen data were re-based starting from May-Jun 2024.

• online trackingGoldman Sachs IMF tracker

  Tracking combined online infant formula sales across Tmall/Taobao/JD

  The report uses Goldman Sachs' online tracking data to assess brands' yoy growth, share changes and channel divergence on Tmall/Taobao/JD.

• Valuation methodsP/E target price method

  Deriving target prices based on target P/E and discount rate

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

Asset mapping & comparison

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

• China Feihe Ltd.

  Key coverage name; rated Neutral

  Strengths

  Offline decline narrowed from -15% in Jan-Feb to -12% in Mar-Apr, and market share increased 0.4ppt sequentially to 21%.

  Weaknesses

  Offline sales still underperformed the industry's -8.2% decline; tracked sales across all channels fell 24% yoy in Mar-Apr, and online sales fell 31% yoy in May.

  Comparison

  Weaker than Yili, but the online decline narrowed versus April.

  Risks

  Birthrates coming in below expectations, intensifying competition, food safety incidents in the industry, and policy support falling short of expectations.

• Yili Industrial

  Key coverage name; rated Buy

  Strengths

  Offline sales grew 1.9% yoy in Mar-Apr, clearly outperforming the industry, with mother-and-baby store channel sales up 2.8% yoy.

  Weaknesses

  Combined Tmall/Taobao/JD online sales fell 17% yoy in May, weaker than April's -10%.

  Comparison

  Offline performance was significantly better than Feihe and the industry overall.

  Risks

  Premium liquid milk demand coming in below expectations, dairy demand recovery slower than expected, and intensifying competition.

• The a2 Milk Co.

  Covered name; rated Buy

  Strengths

  Mother-and-baby store channel sales grew 2.9% yoy in Mar-Apr, and value share rose to 4.3%.

  Weaknesses

  Online sales fell 25% yoy in May, which the report says may be related to supply reductions since April.

  Comparison

  Its offline niche channel was better than the industry, but online performance was weaker than Aptamil and Bellamy's.

  Risks

  Supply changes, online share volatility, and weak industry demand.

• Mengniu Dairy

  Covered name; rated Buy

  Strengths

  Excluding Yashili, offline sales grew 10% yoy in Mar-Apr.

  Weaknesses

  Growth slowed from +36% in Jan-Feb, and offline share declined sequentially.

  Comparison

  Growth remained positive, but sequential momentum slowed markedly.

  Risks

  Slowing industry demand, intensifying competition, and diverging performance across sub-brands.

• H&H / Biostime

  Not covered; brand update

  Strengths

  Biostime offline sales grew 22.4% yoy in Mar-Apr, and online sales grew 25% yoy in May.

  Weaknesses

  Offline share fell from 7.8% in Jan-Feb to 7.5% in Mar-Apr, and online growth slowed markedly from +68% in April.

  Comparison

  Growth remained above the industry, but share and momentum softened at the margin.

  Risks

  High base, volatile online growth, and share pullback.

Key data

• Offline industry sales-8.2% yoyIn Mar-Apr 2026, Nielsen's offline infant formula market declined slightly more than the -7.7% drop in Jan-Feb.
• Offline volume-9% yoyVolume remains the main drag on offline sales.
• Offline ASP+0.9% yoyPrices rose slightly, but not enough to offset the decline in volume.
• Mother-and-baby store channelabout -7% to -7.3% yoyThe report describes the mother-and-baby store channel as down about 7% or 7.3% in different sections.
• Modern channel-20% yoyThe decline in the modern channel in Mar-Apr was significantly larger than in the mother-and-baby store channel.
• Online industry sales-19% yoyCombined Tmall/Taobao/JD sales in May 2026, weaker than April's -14%.
• JD online channel-26% yoyJD's channel in May clearly dragged down overall online performance on a high base.
• Feihe offline sales-12% yoyIn Mar-Apr 2026, the decline narrowed from -15% in Jan-Feb but was still weaker than the industry.
• Feihe online sales-31% yoyCombined Tmall/Taobao/JD sales in May 2026, with the decline narrowing from -47% in April.
• Yili offline sales+1.9% yoyIn Mar-Apr 2026, mainly driven by +2.8% growth in the mother-and-baby store channel.
• Yili online sales-17% yoyCombined Tmall/Taobao/JD performance in May including Pro-Kido, weaker than -10% in April.
• A2 mother-and-baby store sales+2.9% yoyIn Mar-Apr 2026, share rose to 4.3%, up 0.2ppt sequentially.

Impact & implications

At the industry level, infant formula demand remains under pressure, with declining volumes and birthrate risk continuing to weigh on growth; at the channel level, JD and the modern channel are more of a drag, while Tmall/Taobao is relatively more resilient. At the company level, Yili's offline performance shows strong channel and share resilience; Feihe, despite sequential improvement, still faces pressure from underperforming the industry and declines across channels; A2, Biostime and Bellamy's show relative strengths in certain channels, but volatility remains high.

Risks

• A higher or lower-than-expected number of newborns will affect the demand outlook for infant formula.
• Changes in competitive intensity may affect brand share, pricing and profitability.
• Faster or slower-than-expected premiumization growth will affect product mix and valuation assumptions.
• Food safety incidents in the industry may hit demand and brand trust.
• Policy support that is stronger or weaker than expected may affect the pace of industry recovery.
• High bases in online channels and changes in platform structure may cause monthly data volatility.

What to watch

• Whether Nielsen offline volume and ASP continue to diverge in the subsequent months of 2026.
• Whether JD channel weakness in May is followed by a recovery.
• Whether Tmall/Taobao continues to weaken around 618 due to the high base.
• Whether Feihe's recovery in offline share can translate into sales improvement.
• Whether Yili's positive growth in the mother-and-baby store channel is sustainable.
• Whether the impact of A2's supply reduction on online sales and share continues.
• Whether the relatively outperforming growth of Biostime, Bellamy's and Aptamil can be maintained.