Why is Asia demanding so much baby formula?
UKconsumer goods giant Reckitt Benckiser is betting big on Asia's growing thirst for infant formula. Getting more sales in that region was amajor reason it gave for Thursday's $16.7bn (£13.3bn) bid for US firm Mead Johnson - the world's second-biggest maker of the product. Baby milk formula is big business. Globally sales were worth $41bn in 2014, according to Euromonitor. And Asia is comfortably the fastest-growing market. But why?
China's 2015 decision to scrap its one-child policy has huge implications not just for demographics, but for consumer-oriented businesses such as Reckitt and Mead. Couples are now allowed to have two children after concerns about China's ageing population led the government to reverse the decades-long rule. Last year,China's birthrate was the highest this century, with the number of newborns rising by 7.9%,or 17.86 million, on 2015. As a result of this baby boom, analysts expect demand for food, formula, clothes and medicines to skyrocket.
"Two children rather than one means twice as many feeds, twice the number of disinfectant wipes and twice as many dishes to wash," David Kuo,chief executive of the Motley Fool in Singapore said. However changes to import rules will require the industry to adjust - with some producers warning that'll have an impact on sales in the short term. Cultural mindsets also play a part. Long-term breastfeeding is rare among Chinese mothers, who often doubt the quality of their breast milk.
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