New Delhi, July 2025 — China’s recent rebound in birth rates, backed by aggressive subsidy programs, is sparking a seismic shift in the global dairy industry, especially in the infant nutrition segment. With human milk oligosaccharides (HMOs) emerging as the next major innovation in infant formula, investors and dairy producers are rapidly shifting their focus toward this high-growth frontier.
For India, the world’s largest milk producer and a major exporter of dairy ingredients, these developments hold strategic importance. From biotech partnerships to market positioning, the ripple effects of China’s baby boom are global, and India must prepare to ride the wave.
👶 China’s Birth Revival: Demand Tailwinds for Dairy
China recorded 9.54 million births in 2024, a notable 520,000 increase over the previous year, thanks to targeted subsidies like:
- RMB 3,000 dairy vouchers in Hohhot
- Feihe’s RMB 1.2 billion infant formula subsidy program
Feihe, China’s top infant formula brand with a (17.5% market share), reported 6.2% revenue growth ana d 11.1% increases in 2024. This resurgence is accelerating demand for premium, functional dairy ingredients—especially HMOs.
🧬 HMO Boom: Europe’s Lead, Asia’s Opportunity
Human Milk Oligosaccharides (HMOs) mimic natural breast milk compounds that support infant immunity and gut health. By 2030, Goldman Sachs projects that HMO adoption in infant formula will reach 50%, creating a $570 million global market.
Key European innovators in the HMO space:
- Jennewein Biotechnologie (Germany): Holds over 30 HMO patents; its “HMO 3.0” platform cuts production costs by 40%.
- Glycom A/S (Denmark): Specialises in sialic acid HMOs, partnering with Yili, China’s largest dairy brand.
- DSM (Netherlands): With 12 HMO variants and industrial-scale fermentation, DSM is positioned as a global supplier.
These players are increasingly entering strategic collaborations with Chinese dairy giants looking to enhance product functionality and capture premium pricing (20–30% higher for HMO-based formulas).
🏭 China’s Dairy Market: Undervalued Giants Ready to Roar
China’s dairy market is forecast to grow from $74 billion in 2025 to $91 billion by 2030. Yet key players are still trading at low valuations:
Growth enablers:
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Urbanisation: Over 60% of Chinese citizens now reside in cities, favouring premium, packaged products.
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E-commerce Boom: Online dairy sales jumped 36% in 2024, driven by livestreams and influencer-led marketing.
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Government Support: The National School Milk Program aims to serve 50 million students by 2027.
🇮🇳 Strategic Implications for the Indian Dairy Sector
For Indian stakeholders—cooperatives, ingredient manufacturers, and exporters—the rise in HMO demand and China’s infant formula push offer unique opportunities:
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Export Window: India could target exports of lactose, galactose, and other HMO substrates.
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R&D Collaboration: Indian biotech firms can partner with European HMO producers or license technology for cost-effective production.
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Product Innovation: Indian brands can introduce HMO-enriched dairy supplements domestically for infants and adults with gut health concerns.
“China’s dairy reset is more than just a domestic story—it’s an international shift. Indian dairy must now innovate, export smart, and explore cross-border tech partnerships,” says a senior economist at Jordbrukare.
