Analysis of the Impact of Nestlé's Infant Formula Recall on the Competitive Landscape of China's Infant Formula Market

Based on the latest collected information, I will systematically analyze the impact of Nestlé’s recall from multiple dimensions including market competition landscape, regulatory environment, and changes in consumer trust.

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On January 6, 2026, global food giant Nestlé announced a preventive recall of infant formula in

[1][2]. The recall originated from an issue detected during internal self-monitoring at its Dutch factory – , which may lead to excessively high mineral content [3]. Nestlé clearly warned that the problematic milk powder will turn gray or green after mixing, making it easy for parents to identify.

The recall covers a wide range of brands and product lines, including:

Brand Series	Product Type
Nestlé BEBA Supreme	Ultra-premium Series
BEBA Expert HA	Partially Hydrolyzed Protein Series
Wyeth Illuma Dual Extract New Version	Premium Series
Wyeth Illuma Sensitivity HA	Moderately Hydrolyzed Series
Wyeth Illuma Future	Premium Formula Series
Wyeth Illuma Organic	Organic Series
Nestlé NAN Supreme Pro A2 6HMO	A2 Protein + HMOs Series
Nestlé NAN Protect	Basic Series
SMA Series	Infant Formula

In the Chinese market, the Office of the State Council Food Safety Commission and the State Administration for Market Regulation have urged Nestlé (China) Co., Ltd. to recall the relevant batches, involving

of infant formula [4].

It is highly noteworthy that this recall occurred during a

. On January 1, 2026, Nestlé Nutrition and Wyeth Infant Nutrition just completed their merger, with the new Nestlé Nutrition business led by Joel Seah [5]. Launching a global large-scale recall during this integration period is a huge test for the business team, especially for the high-expectation Nestlé core brand products.

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China’s infant formula market is undergoing profound structural changes. According to the latest market data:

Brand/Group	Market Share	Market Position	Core Advantages
Yili Group	18.1% (retail sales)	No. 1 in China	Omnichannel layout, merger and integration (Ausnutria)
China Feihe	No. 1 across all channels	No. 1 single brand	Domestic leader, technological innovation
Junlebao	Steadily increasing	Domestic brand echelon	Cost-effectiveness, in-depth channel cultivation
Biostime	16.4% in ultra-premium segment	Leader in niche market	Premium positioning, channel expansion

Yili’s 2025 interim report shows that the company’s milk powder and dairy products business achieved operating revenue of

, with a year-on-year growth of , ranking first in the industry in terms of overall market share [6]. Comprehensive data from third-party retail research by Nielsen and Star Chart shows that Yili’s overall retail sales market share of infant formula reached , an increase of compared to the same period last year [7].

As a leading domestic infant formula enterprise, Feihe

amid the overall industry decline [8].

In the first half of 2025, China’s infant formula market showed the characteristic of

[9]:

• Market share of leading brands increased by 8% year-on-year
• Small and medium-sized brands are exiting at an accelerated pace
• The time consumers spend examining a brand’s “hard power” during decision-making has
  increased by 60%
  compared to three years ago

This trend indicates that scientific research capabilities, formula adaptability, and fulfillment of social responsibilities are becoming more important selection factors than advertising volume.

Although the market share of domestic brands continues to increase, foreign brands still maintain significant advantages in the

:

Indicator	Data
Year-on-year growth of total ultra-premium market	13.3%
Market share of foreign brands in ultra-premium segment	More than 60%

Foreign brands still have leading advantages in the R&D and application of core ingredients such as

. Friso ranks third in the infant formula market share in maternal and child stores, supermarkets, and traditional e-commerce channels, and first among international brands; Friso Prestige Stage 3 is the of China’s infant formula [10].

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As the world’s largest food company, Nestlé’s large-scale recall of its infant formula business will have a significant short-term impact:

Infant formula is a

, and consumers have near-zero tolerance for safety issues. Nestlé’s recall may trigger the following reactions:

1. Panic returns and abandonment of purchases
   : Existing consumers may choose to return products and switch to competing brands
2. Word-of-mouth communication effect
   : Negative information spreads rapidly in maternal and child communities and social media
3. Prolonged trust repair cycle
   : Even if product safety is restored, consumers may still maintain a wait-and-see attitude

According to consumer behavior research, the trust repair cycle for infant formula typically takes

, which is much longer than that of general consumer goods.

The recall will exert multiple pressures on Nestlé in terms of channels:

• Maternal and child store channels
  : Retailers may reduce shelf space or remove related products from shelves
• E-commerce platforms
  : May face declining traffic and lower search rankings
• Offline promotion activities
  : It will be difficult to carry out promotional activities in the short term

The costs that Nestlé China needs to bear include:

• Logistics costs for product recall
• Inventory losses
• Consumer refunds
• Marketing investment for brand repair

The recall coincides with the

of China’s infant formula market, which may become an important catalyst for reshaping the market pattern:

Domestic brands may take this opportunity to accelerate market expansion:

• Leverage the Jinlingguan brand to strengthen the brand positioning of “more suitable for Chinese babies”
• Accelerate layout in the ultra-premium market to seize Nestlé’s market share
• Strengthen scientific research endorsement and highlight formula advantages

• Consolidate the No. 1 position across all channels
• Strengthen consumer education and emphasize the safety of domestic formulas
• Expand market share in first- and second-tier cities

In response to the recall, Nestlé needs to adopt multi-level response strategies:

Response Level	Specific Measures
Crisis PR	Proactive and transparent communication, demonstrate a responsible attitude
Quality Control	Strengthen supply chain inspection system, rebuild quality confidence
Product Strategy	Optimize product portfolio, focus resources on core product lines
Channel Strategy	Strengthen strategic cooperation with core channels
Brand Communication	Highlight scientific research capabilities and brand heritage

China’s infant formula market is facing multiple structural challenges:

1. Demographic structural changes
   : The number of newborns continues to decline, dropping from 17.86 million in 2016 to approximately 9.022 million in 2024, a year-on-year decrease of
   5.8%
   [11]
2. Slowing market growth
   : From January to August 2025, the overall retail sales of infant formula across all channels in China only increased by
   1.6%
   [12]
3. Intensified competition
   : Competition in the stock market, with increasingly fierce market share disputes among brands

Against the above background, Nestlé faces strategic choices:

• Focus resources on the ultra-premium niche market
• Leverage advantages in scientific research and formulas
• Maintain a high gross profit strategy

• Expand product lines to cover more price segments
• Strengthen penetration in sinking markets
• Pursue economies of scale

• Focus on special formulas (such as niche needs like hydrolyzed protein, organic, etc.)
• Build a unique product matrix
• Avoid direct competition with domestic brands

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According to industry research, the factors that consumers value most when choosing infant formula have changed significantly:

Factor	Change in Importance
Brand history and reputation	Continues to be important, but the margin of error has narrowed
Scientific research capabilities	Significant increase in importance
Formula science	Has become a core decision-making factor
Quality control system	Consumer attention has increased significantly
Social responsibility performance	Influence has increased

The time consumers spend examining a brand’s “hard power” has increased by

compared to three years ago, with solid scientific research, suitable formulas, and fulfilled responsibilities becoming more important selection criteria than “advertising volume” [13].

• Timely and accurate disclosure of the cause of the incident and progress of handling
• Establish direct communication channels with consumers
• Invite third-party institutions for quality certification

• Strengthen supplier audits and raw material testing
• Establish a full-process traceability system
• Improve factory production standards

• Continue to invest in R&D and launch differentiated products
• Strengthen cooperation with authoritative scientific research institutions
• Accumulate clinical verification data

• Actively participate in the formulation of industry standards
• Support public welfare undertakings for maternal and child health
• Build long-term brand reputation assets

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• Nestlé responds to the recall quickly and effectively
• No cases of consumer health damage are found
• Brand trust gradually recovers within 6-12 months

• Short-term market share decline of 2-3 percentage points
• Recovery to pre-incident level within 12 months
• The competitive landscape remains basically stable

• Nestlé adopts excellent crisis response strategies
• Consumers highly recognize its responsible attitude
• Competitors fail to effectively seize the opportunity

• Brand trust increases instead of decreasing
• Market share remains stable or increases slightly
• Strengthen the image of a “responsible corporate citizen”

• The recall continues to escalate
• Consumer health problems are found
• Competitors launch strong attacks

• Market share decline of 5-8 percentage points
• Brand repair cycle is extended to 18-24 months
• Some channel cooperations are terminated

The impact of the recall may show regional differentiation characteristics:

Region	Degree of Impact	Reason Analysis
First-tier cities	Moderate	Consumers have high brand loyalty, and information is transparent
Second-tier cities	Moderate to high	Fierce competition, high penetration rate of domestic brands
Third- and fourth-tier cities	May be low	Limited channel coverage, differences in brand awareness
Cross-border channels	High	Increasingly strict regulation, enhanced consumer vigilance

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Company	Potential Impact	Investment Implications
Yili Co., Ltd.	Positive	Expected to take over the market share lost by Nestlé and strengthen market leadership
China Feihe	Positive	Consolidate domestic leading position and accelerate breakthrough in the premium market
Mengniu Dairy	Neutral to positive	Indirectly benefits from industry pattern optimization
Nestlé (Switzerland)	Short-term negative	China business is under pressure, long-term impact to be observed

1. Systematic food safety risk
   : If a larger-scale quality problem is found, it may trigger a chain reaction
2. Regulatory policy risk
   : May face stricter regulatory review and compliance requirements
3. Consumer confidence recovery falls short of expectations
   : Affects the speed of sales and market share recovery
4. Countermeasures from competitors
   : Domestic brands may adopt aggressive market expansion strategies

• Focus on Yili Co., Ltd.
  : As the market share leader, it is expected to continue to benefit from industry integration
• Focus on Feihe
  : As the leader of domestic infant formula, its scientific research capabilities and channel advantages are expected to be converted into market share
• Treat Nestlé cautiously
  : Under short-term pressure, but need to observe its crisis response capabilities and long-term strategic adjustments

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1. The recall has caused a significant short-term impact on Nestlé
   , but the degree of impact depends on the quality of crisis response and subsequent developments.
2. The pattern of China’s infant formula market is undergoing in-depth reshaping
   , with the market share of domestic brands continuing to increase; foreign brands still have advantages in the ultra-premium market but face challenges.
3. The determining factors of consumer trust have fundamentally changed
   , with scientific research capabilities, formula science, and social responsibilities becoming more important considerations than brand history.
4. Nestlé has strong scientific research capabilities and brand assets
   ; if it can adopt appropriate response strategies, it still has the opportunity to rebuild consumer trust and maintain its market position.
5. Domestic brands are facing a strategic opportunity period
   ; they should seize the window period to accelerate market expansion, but need to avoid excessive aggressive offensives that lead to resource consumption.

China’s infant formula market will continue to maintain the basic characteristics of

. Although Nestlé’s recall is an individual case, it reflects the essential changes in industry competition:

• Safety is the bottom line
  : Any quality problem will suffer severe market punishment
• Scientific research is the core
  : Differentiated formulas and clinical verification will become the focus of competition
• Trust is an asset
  : The accumulation of brand reputation requires long-term investment, but it can be destroyed in an instant
• Consumer sovereignty
  : Improved information transparency gives consumers stronger voice

For market participants, only by continuously strengthening quality management, increasing R&D investment, and building brand trust can they move forward steadily in the fierce market competition.

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[1] Xinhua News Agency - Nestlé recalls some infant formula in 31 countries and regions (https://www.news.cn/world/20260107/17553dd84cfc4d91b09bc80c00f7942d/c.html)

[2] Beijing News - Nestlé recalls infant formula in multiple countries, involving 71 batches in the Chinese market (https://www.bjnews.com.cn/detail/1767792171169332.html)

[3] The Paper - Global Recall! Some Nestlé milk powder may cause food poisoning (https://m.thepaper.cn/newsDetail_forward_32337439)

[4] Xinhua News Agency - Nestlé recalls some infant formula in 31 countries and regions (https://www.news.cn/world/20260107/17553dd84cfc4d91b09bc80c00f7942d/c.html)

[5] Sina Finance - Just now, Nestlé China responded! 4 brands totaling 30 batches need to be recalled (https://finance.sina.com.cn/stock/stockzmt/2026-01-07/doc-inhfnemt4783661.shtml)

[6] 21st Century Business Herald - Dairy Industry Changes in 2025: Regional Dairy Enterprises, Intensified Differentiation (https://www.21jingji.com/article/20251226/herald/dfda7f4a862c7ab02cdb670fff4b6583.html)

[7] Shangpu Consulting / Yili’s official disclosure

[8] Investment Journal - The Winter of Infant Formula: Who Will Exit First Among Yili, Mengniu, Biostime, Feihe, and Junlebao? (https://news.pedaily.cn/202512/558021.shtml)

[9] Shangpu Consulting Industry Report

[10] Sohu - Relying on technological and brand advantages, foreign milk powder is making a comeback in China (https://m.sohu.com/a/965537786_217394?scm=10001.325_13-325_13.0.0-0-0-0-0.5_32)

[11] iiMedia Research - 2025 H1 China Milk Powder Industry Operation Data Monitoring Half-Year Report (https://www.iimedia.cn/c400/106901.html)

[12] Nielsen IQ Data

[13] Shangpu Consulting Industry Report / iiMedia Research