Low Birthrate Causes Formula and Cereal Sales to Plummet... Catering to Adult Tastes

[Asia Economy Reporter Seungjin Lee] As the prolonged low birthrate has significantly reduced sales of food products mainly consumed by children, the food industry has started to adapt. They have changed the taste and nutritional content of products to target adult palates.

According to the food industry on the 16th, sales of cereal products, infant formula, and juices have been continuously declining in recent years. This is due to the prolonged low birthrate issue, which has reduced the absolute number of children, the main consumer base.

In fact, sales of children’s cereals such as Dongseo Food’s 'Cocoball' and 'Oreo O’s' have decreased by about 3% over the past three years. Especially last year, it was expected that sales of children’s cereals would increase as children stayed home longer without attending school due to COVID-19, but sales slightly declined instead.

In response, Dongseo Food stopped launching new children’s cereal products and strengthened products targeting families or adults. They expanded cereal products including granola made by baking healthy whole grains like oats, reducing sweetness and emphasizing health, which captured the taste of adults who want to have a light meal while taking care of their health.

After successfully targeting adult tastes, overall cereal product sales also grew. Sales, which were 230 billion KRW in 2018, recorded 234.7 billion KRW in 2019, a 2% increase, thanks to more than 10% growth in sales of products aimed at adults compared to the previous year. Last year, sales of products targeting adults rose by 6%, and overall cereal product sales increased by 2.4% compared to the previous year.

The infant formula market, hit hard by the low birthrate, has also started targeting adults. They have been releasing protein products called 'adult formula' one after another. According to the dairy industry, infant formula sales have been decreasing by 10% annually over the past five years. Since the total fertility rate dropped from 1.05 in 2017 to below 1.0 after 2018, the infant formula market has fallen into a severe slump.

Instead, the dairy industry is accelerating the launch of powdered protein supplements. For example, Maeil Dairies introduced Korea’s first protein nutrition brand 'Selex' in 2018. As middle-aged and older adults’ interest in protein intake increased, Selex’s sales have rapidly grown, doubling from 25 billion KRW in 2019 to 50 billion KRW the following year. Maeil Dairies expects Selex to achieve sales of 85 billion KRW this year.

Meanwhile, the juice market, which suffered sales damage due to the worsening low birthrate, adopted a strategy to strengthen product quality and target parents. According to the beverage industry, the total juice market sales have been declining by about 7% annually from 780 billion KRW in 2018. Last year, it is estimated to have decreased by 7.8% to 680 billion KRW compared to the previous year. In response, Lotte Chilsung Beverage launched ‘Organic Juice,’ an organic and children’s juice, whose sales from January to May this year increased by about 36% compared to the previous year. This is analyzed as tapping into parents’ desire to feed their children healthier food.

A food industry official explained, "The low birthrate is expected to continue for a long time, so the industry’s concerns about children’s products are growing," adding, "Instead, the market is expected to respond to changes by expanding product lines emphasizing health, which adults are highly interested in."