Don't compete on birth rates, compete on innovation: Feihe is rewriting the growth rules of the milk powder industry

Ask AI · How does Feihe’s milk protein technology lead industry quality upgrades?

Produced by | China Visitor Network

Reviewed by | Li Xiaoyan

On March 26, China Feihe (06186.HK) released its 2025 full-year performance report. During a period of deep industry adjustment, it submitted a solid answer sheet with robust operating resilience: full-year operating revenue reached 18.113 billion yuan, and profit for the year was 2.094 billion yuan. Although core businesses faced phased pressures due to shrinking industry demand, Feihe relies on its core milk protein technology barrier, accelerating its transformation from “single reliance on infant formula powder” to “a leader in full lifecycle nutrition.” With technological innovation, category expansion, and global deployment as pivots, it is reshaping the logic for high-quality growth.

In 2025, China’s infant formula industry entered a phase of deepening stock competition. Changes in the population structure of births and intensifying market competition became challenges faced by industry companies as a whole. As an industry leader, Feihe’s performance shows characteristics of phased adjustment: its infant formula business achieved revenue of 15.868 billion yuan, accounting for 87.6% of total revenue, down 16.8% year on year, reflecting a relatively significant impact from industry cycles.

But when looking at the industry landscape, Feihe’s leading position has not wavered. According to Euromonitor research data, Feihe has ranked first in China’s infant formula sales for 7 consecutive years, and its core product competitiveness continues to stand out. In 2025, Feihe’s flagship product Zhuorui completed a major upgrade, adding key nutritional ingredients such as HMO and Sn-2DHA. It focuses on “absorption power + self-protection power + brain development” comprehensive, all-dimensional nutritional support. Supported by multiple scientific validations, the content of its active nutrient N-glycans reaches 2 times that of ordinary milk powder, while its DHA absorption rate increases to 6.4 times that of ordinary milk powder—its core nutrient absorption efficiency is significantly ahead.

Compared with other dairy companies in the industry, Feihe’s differentiated advantages are gradually becoming apparent. As dairy dual oligopolies, Yili and Mengniu cover all product categories, whereas Feihe focuses on the infant formula sub-segment, building a higher category barrier by leveraging an ultra-premium product matrix. Regional leaders such as Bright Dairy and Synutra each have advantages in niche fields like low-temperature milk, forming a differentiated competitive landscape with Feihe. Against the backdrop of overall industry pressure, Feihe consolidates its fundamentals through refined operations, demonstrating strong resilience across cycles.

Facing industry challenges, Feihe has clearly stated its transformation direction: “using independent milk protein innovation as the core engine, and full lifecycle nutrition as the strategic main line.” Through technological breakthroughs and category expansion, it addresses the problem of over-reliance on a single category and opens up a second growth curve.

In the core technology area, Feihe continues to increase R&D investment, building milk protein research and development advantages that are difficult for the industry to replicate. In early 2025, Feihe released the globally leading “Milk Protein Fresh Extraction Technology,” overturning traditional cheese production processes. It enables the commercial production of 11 key milk protein raw materials, including lactoferrin and bovine colostrum powder. The core technology holds 100% independently owned intellectual property rights, and its equipment localization rate exceeds 80%. Relying on this technology, Feihe produces core raw materials in-house, shortening raw-material freshness from “years” to “days,” laying a solid foundation for product quality upgrades.

By the end of 2025, Feihe launched the world’s first milk powder fresh raw-material traceability system. This became an important breakthrough for transparency in industry quality. With a simple scan, consumers can query production information of key raw materials such as whey protein and lactoferrin. This turns product quality into data that can be perceived, providing consumers with a reliable basis for choosing milk with confidence. The system was first applied to two top-tier new products: Zhuorui and Qicui. Zhuorui includes 500mg lactoferrin, 8 types of HMOs, and 15 billion probiotics, highlighting “the top tier for mother-source self-protection, fresh raw materials for better absorption.” Qicui focuses on brain development, equipped with top-tier Sn-2DHA, 5 major brain phospholipids, and 8 HMOs, precisely meeting the nutritional needs of babies in China.

In its full-age nutrition layout, Feihe makes targeted efforts around “one for the elderly and one for the young,” building a product matrix covering infants, children and adolescents, and middle-aged and elderly groups. In the children and adolescents segment, it launched the “Love Eating Vegetables Cheese” series. Centered on the dual needs of “tastiness + nutrition,” it creates blockbuster products and won two awards at the 2025 World Dairy Innovation Award: “Best Cheese” and “Best Dairy Snacks.” In the middle-aged and elderly segment, focusing on pain points such as muscle loss and weak digestion and absorption, it launched the AiBen small-molecule milk protein special dietary powder series. By using patented enzymatic hydrolysis technology, it achieves “topping up muscles and bones together.” It won the 2026 International Award for Muscle and Bone Health Innovation at the Functional Food Health Summit. Data shows that in 2025, Feihe’s revenue from other dairy products reached 2.06 billion yuan, up 36.1% year on year; revenue from nutritional supplements was 183 million yuan. The growth momentum for full-age business continued to be released.

While deepening its presence in the domestic market, Feihe is accelerating its global expansion to inject new growth momentum. Its Canada factory obtained the first local infant formula production license and started production officially, becoming Canada’s only infant formula manufacturing factory. Its products have entered more than 1,600 supermarkets such as Walmart. In the U.S. market, products passed the initial FDA review, and Feihe reached a cooperation with the U.S. brand Munchkin, laying the foundation for expansion in North America. In the Southeast Asian market, starting with the Philippines, it launched the high-end AceKid pure fresh milk formula. It plans to replicate the successful experience in potential markets such as Vietnam and Indonesia.

The coordinated advancement of global deployment and full-age transformation is helping Feihe shift from “scale dependence” to “quality-driven” development. In 2025, Feihe continued to optimize its channel structure and deepen user operations. Against the backdrop of intensifying industry competition, it still maintained steady cash flow and sufficient funding. As of the end of the year, cash and cash equivalents reached 7.539 billion yuan, providing solid support for subsequent transformation.

From the perspective of industry development trends, China’s dairy industry has fully entered a stock-competition era. Leading companies continue to stay ahead by leveraging advantages in scale, channels, and brands, while niche leaders need to break through through differentiated innovation. Feihe’s transformation path precisely aligns with the industry’s direction toward high-quality development: building differentiated barriers with core milk protein technology, expanding growth space with a full-age product matrix, and opening additional markets through global deployment—gradually reducing reliance on a single category.

At present, Feihe’s transformation remains in a critical stage. The share of the full-age business still needs to be further increased, and overseas market expansion also requires continued investment. However, in the long term, with residents upgrading health consumption and growing demand for precise nutrition, the market for full lifecycle nutrition solutions holds enormous potential. With deep technological accumulation, a stable leading position, and a clear transformation strategy, Feihe is gradually building a new growth system of “core technology + full-age products + global network.”

Looking ahead, Feihe will continue to stay committed to the main line of independent milk protein innovation, deepen its full-age nutrition layout, and accelerate its global progress. Through dual upgrades in technology and operations, it will drive the company’s leap from “an infant formula leader” to “a full-age nutrition leader,” achieving high-quality growth amid stock competition in the industry, and providing a new example for the transformation and upgrading of China’s dairy industry.