Feihe's Roadmap: Infant Formula Sales Decline, "Shifting" to the Milk Protein Market?

Fufeng, which insists on being the “champion of infant formula” in China, is now opening up the milk protein market.

What needs to be seen is that Fufeng’s performance is continuing to face pressure. In 2025, its revenue fell year over year by 12.7% to 18.11B yuan; net profit fell year over year by 45.7% to 1.94B yuan. Of these, in the second half of 2025, Fufeng’s revenue fell year over year by 15.9% to 8.96B yuan; net profit fell year over year by 44.6% to 939 million yuan.

Behind this is the contraction of the infant formula market.

According to data from the National Bureau of Statistics, in 2025, China’s number of newborns was 7.92 million, a net decrease of 1.62 million year over year. This puts pressure on domestic demand for infant formula. Also, according to Nielsen IQ, in 2025, the sales value of the domestic infant formula industry declined slightly; meanwhile, the volume also fell slightly year over year.

Under such circumstances, Fufeng must find new possibilities.

Competition intensifies

Objectively speaking, as the overall infant formula market shrinks, competition in the market is moving toward an all-out level.

Like Fufeng, Beingmate is also showing a downward trend. In 2025, Beingmate’s infant formula sales value fell year over year by 8.4% to 5.32 billion yuan. Among them, the flagship product, Kabrita, saw domestic revenue fall year over year by 15.5% to 2.58 billion yuan.

But it’s important to see that some brands are growing against the trend.

In 2025, Healthyand Jiahle Group’s infant nutrition and care products business achieved revenue of 5.26 billion yuan, up 20% year over year. Among them, in mainland China, infant formula sales value grew year over year by 28.3%. Danone’s financial report shows that in 2025, the company’s professional specialized nutrition business revenue in China, North Asia and Oceania (CNAO) was EUR 2.77 billion, up 13.2% year over year.

In the same year, Mengniu’s milk powder and other dairy products business grew year over year by 8.7% to 6.65B yuan. In the first three quarters of 2025, Yili’s milk powder and dairy products business achieved revenue up 13.7% year over year to 24.26 billion yuan.

It should be noted that Yili also claims to be the “champion of China’s infant formula market.” According to a reporter with 21st Century Business Herald, the “champion rivalry” between Yili and Fufeng lies in different counting bases. Yili’s ranking first is based on the overall infant formula and infant nutrition milk market, including both milk powder and goat milk powder, which includes Beingmate’s sales. Fufeng, however, ranks first based on a single brand.

Returning to Fufeng, although it still holds an advantage in the infant formula milk powder market, its pressure is very clear. According to disclosures by Fufeng, in 2025 its overall offline and online market share in the infant formula industry was 19%. Compared with 20.5% in 2024, this represents a decline.

Fufeng’s explanation is that it is actively推进ing channel inventory optimization. By product line, its core large single products, Xingfeifan Classic/ Zhuorui/ Zhuoyao, achieved annual revenue of 4.3 billion/6.5 billion/710 million yuan, and Zhuorui sales, down 3% year over year, performed relatively resiliently.

For the infant formula market, Fufeng is also adjusting.

The company said it will continue to launch new products on the product side. Sales revenue of its new products, JiXui and QiXui series, has exceeded 69 million yuan in less than 1 month since their launch. At the same time, it will further increase its layout in segmented tracks. In the first half of 2026, it plans to launch super-premium goat milk powder new products and upgrade its Xingfeifan Xiaoyang formula; in June, it expects to introduce customized new products in line with channel demand.

At the same time, Fufeng will deepen its full-lifecycle user operations, building a closed-loop conversion system for early-stage groups from conception to newborns, and establishing a system with headquarters-level coordination and regional collaboration.

Additionally, Fufeng is accelerating internationalization. The Canadian market has already entered more than 1,600 mainstream channels such as Walmart and captured a 2% market share. In 2026, it plans to expand contract manufacturing and private-label businesses, and subsequently gradually enter markets such as North America, Mexico, and Indonesia.

What needs to be seen is that Fufeng’s net profit dropping by about 40% is also related to the decline in the sales scale of infant formula with high gross margins.

In 2025, Fufeng’s gross margin fell by 1.3 percentage points year over year to 65.0%. Of this, the infant formula gross margin rose by 2.2 percentage points year over year to 73.5%. Fufeng’s gross margin decline year over year in 2025 was mainly affected by an increased proportion of sales revenue from low-gross-margin ingredient powders (i.e., whole milk powder, skim milk powder, and thin cream).

That year, Fufeng’s selling/administrative expense ratios rose year over year by 4.9/1.2 percentage points to 39.5%/9.3%, and the expense ratios increased significantly. In 2025, Fufeng’s attributable net profit margin fell by 6.5 percentage points year over year to 10.7%, mainly due to reduced government subsidies, impairment losses brought by spray drying, and negative operating leverage caused by revenue decline, among other factors.

A new market

Under such an environment, Fufeng must find incremental volume.

Leng Youbin, Chairman and CEO of China Fufeng, placed his hopes on the milk protein sector.

Milk protein is the basic nutrient most easily absorbed by the human body. In maintaining muscle function, enhancing immunity, promoting growth and development, improving metabolism, and other areas, it has irreplaceable importance. It is a key support for health across the entire lifecycle.

At a performance briefing, Leng Youbin said that the prices of key raw materials represented by mainstream concentrated whey protein WPC80 have long remained high. “The current price is 190k to 200k yuan per ton, up 97.82% from the same period last year. The instant WPC80 is close to EUR 20k per ton, up 82.01% from the same period last year.”

Localization of milk protein in China will help improve the industry’s cost structure.

Leng Youbin said that at the end of last year, Fufeng achieved mass production of milk protein. “At present, the prices of the proteins and lactose we produce ourselves are still maintained at the same level as last year. By the end of this year, we will become the largest dairy company producing milk proteins in China. Our competitive advantages and raw material cost advantages will give us a great degree of initiative.”

More importantly, Fufeng hopes to build a nutrition solution across the entire lifecycle with milk protein as its core.

On one hand, it will focus on the milk ingredient business—producing its own milk fat, milk protein, bovine colostrum, and so on—to effectively reduce costs and improve efficiency, while securing a position in the dairy’s deep-processing value chain. Meanwhile, it will focus on nutrition for children and adolescents, building a nutrition lineup including formula milk powder, cheese, and immune eye-care nutrition products. The target revenue for 2026 is 300 million yuan. Among them, vegetable cheese has already become a breakout new product, achieving the number one position for children’s cheese under online multi-brand baby cheese.

In addition, Fufeng is also laying out nutrition for adults. Focusing on the AiBen brand, it is building the cognition of “supplement muscles and bones together.” Its small-molecule milk protein and bovine colostrum series target revenue of 400 million yuan in 2026 and will achieve turnaround to profitability.

“At present, our deep processing is first to meet our own needs—for example, skim powder and casein. We will also have some that we can’t use up. For instance, with thin cream, we will export it, and the sales channels are not a problem. We will also sell some casein externally. In China, we have already formed a relatively stable customer supply relationship. Even in the future, our vision is to become the leader in milk protein deep processing.” At the performance briefing, Fufeng executives mentioned this.

But it should be noted that from today’s market scale, the milk protein market is still far from infant formula. What’s more, the development and large-scale production of high-value functional ingredients in China such as active peptides, lactoferrin, and human milk oligosaccharides (HMOs) are currently facing a prominent problem of insufficient adaptation to standard systems.

For Fufeng, opening up the milk protein market will be a long journey.

(Author: He Hongyuan; Editor: Gao Mengyang)

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