Market evolution: Infant formula (CN 190110) — 2015–2025

Introduction

This report examines the evolution of EU external trade in infant formula (Combined Nomenclature code 190110) over the period 2015–2025. The product covers food preparations for infant use put up for retail sale, based on flour, groats, starch, malt extract, or milk-derived ingredients, and is classified under PRODCOM 10.86.10.70. Over the decade, the EU has consolidated its position as the world's leading exporter of infant formula, with export values rising by 26.4% while volumes actually declined by 3.7% — a dynamic that reflects both significant unit-price appreciation and a strategic pivot toward higher-value markets. Meanwhile, imports into the EU have contracted sharply, underscoring the bloc's growing self-sufficiency. This report identifies and analyses three principal dynamics: (1) the price-driven growth of EU exports; (2) the dramatic geographic reorientation of trade flows; and (3) the consolidation of production and export capacity within a smaller set of EU member states.

1. A Price-Led Export Boom Masking Stagnant Volumes

The headline story of EU infant formula trade over 2015–2025 is one of robust value growth on the export side, entirely driven by rising unit prices rather than expanding physical volumes.

Export values rose substantially while volumes contracted

Between 2015 and 2025, total EU exports of infant formula to non-EU countries grew from €3.89 billion to €4.92 billion, an increase of 26.4%. Over the same period, exported volumes fell from 486,728 tonnes to 468,684 tonnes, a decline of 3.7% (General Overview). This divergence points to a clear trend of unit-price escalation: the average export price per tonne climbed from €7,992 to €10,485, a 31.2% increase over the decade.

Several factors likely explain this price inflation. Infant formula is a high-value-added, safety-critical product subject to strict EU and destination-market regulatory standards. Over the period, many producers shifted their product mix toward premium and specialty segments — including hydrolysed-protein, organic, and stage-specific formulations — which command substantially higher prices. In parallel, global supply-chain disruptions (notably during the COVID-19 pandemic and the 2021–2022 global dairy supply crunch) exerted upward pressure on input costs, which manufacturers passed through to buyers.

Imports tell the opposite story: steep declines in both value and volume

EU imports of infant formula fell dramatically from €57.9 million (10,138 tonnes) in 2015 to €38.7 million (4,258 tonnes) in 2025, corresponding to drops of 33.1% in value and 58.0% in volume (General Overview). Import prices also rose — from €5,716/t to €9,097/t, a 59.2% increase — but the collapse in volume overwhelmed this effect. The resulting trade balance widened from €3.83 billion to €4.88 billion (+27.3%), confirming the EU's status as an overwhelmingly net-exporting bloc.

Price shocks have been acute in several Middle Eastern and North African markets

Volatility analysis reveals that export prices have not moved smoothly; several sharp price shocks were detected. The most significant events include:

These shocks are consistent with the post-COVID period of elevated dairy and energy costs in 2021–2023, and may also reflect supply tightening as EU producers prioritised fast-growing or strategically important markets.

2. A Dramatic Geographic Reorientation: From Hong Kong to Mainland China

The most striking structural shift in EU infant formula exports over the decade has been the geographic reallocation of flows, with mainland China absorbing an ever-larger share while Hong Kong — once the dominant gateway — has collapsed in relative importance.

Mainland China became the undisputed top destination

Exports to China surged from €1.22 billion in 2015 to €2.38 billion in 2025, a 94.9% increase that made China the single largest export market, accounting for nearly half of total EU export value (top partners). At its peak, exports to China reached €2.98 billion. This growth reflects the structural demand from China's large birth cohort, rising middle-class incomes, and — critically — the post-2008 melamine scandal legacy that drove Chinese consumers and regulators toward trusted foreign (especially European) brands.

Hong Kong's role as a re-export hub declined sharply

In contrast, exports to Hong Kong fell from €766 million to €216 million, a 71.9% decline. Hong Kong historically served as a logistical and regulatory gateway for infant formula entering mainland China, particularly before the 2016 relaxation of China's cross-border e-commerce rules and the tightening of parallel-import regulations. The simultaneous rise of direct exports to China and the decline of Hong Kong flows strongly suggest a re-routing of trade from indirect to direct channels, likely facilitated by EU producers establishing direct registration and distribution in China.

The Middle East remained important but showed divergent trends

Saudi Arabia, the third-largest market, experienced a 25.7% decline (from €272 million to €202 million), possibly reflecting increased local production capacity or competition from other suppliers. Türkiye, by contrast, grew by 63.1% (€86 million → €140 million), and Algeria declined by 31.7% (€129 million → €88 million). The United Kingdom — now outside the EU — saw modest growth of 17.7%, likely reflecting its continued reliance on EU supply chains post-Brexit.

On the import side, supply sources diversified

The concentration of EU import sources shifted markedly. Switzerland, once the dominant supplier (€37 million in 2015), saw its share collapse to €8.8 million (−76.2%). New Zealand emerged as a major new source, surging from €0.5 million to €12.4 million (+2,453%), while Algeria and China also became more prominent. The Herfindahl–Hirschman Index (HHI) for imports fell from 5,081 to 2,677 (−47.3%), indicating that the EU's small import base became significantly more diversified over the decade.

3. Production Surge and Internal EU Consolidation

Behind the trade figures lies a remarkable expansion of EU production capacity, accompanied by a growing concentration of export activity among fewer member states.

EU production more than doubled in both volume and value

According to PRODCOM production data, EU production of infant formula rose from 468 million kg (€1.98 billion) in 2015 to approximately 1 billion kg (€5.5 billion) in 2025 — increases of 113.5% in volume and 178.4% in value. Production peaked at an estimated 1.5 billion kg and €6.3 billion in value at some point during the period. This expansion reflects heavy capital investment by major manufacturers (notably in the Netherlands, Ireland, and France) to serve surging global demand, particularly from China.

The Netherlands consolidated its dominance; Germany and Poland surged

Within the EU, the ranking of member states by export value reveals a clear consolidation pattern:

The Netherlands remained the EU's largest exporter throughout, growing from €1.61 billion to €2.09 billion. However, the most dramatic changes occurred elsewhere. Germany's exports tripled from €268 million to €827 million (+208.3%), making it the second-largest exporter by 2025 — displacing Ireland, which saw its exports halve from €981 million to €459 million (−53.2%). Poland also experienced extraordinary growth (+183.8%), rising from €79 million to €225 million. These shifts suggest that production capacity and export capability are spreading from the traditional North-Western European core (Ireland, Netherlands, Denmark) toward Germany, France, Spain, and Poland.

Ireland's specialisation advantage did not translate into export growth

Despite the structural shifts, Ireland remains the most specialised EU member state in infant formula exports, with a Revealed Symmetric Comparative Advantage (RSCA) of 0.675 and a Revealed Comparative Advantage (RCA) of 5.15 in 2025. Ireland's infant formula sector accounts for 10.8% of its own production in this product category. Yet its absolute export performance declined significantly, suggesting that competitive dynamics and possibly post-Brexit trade friction with the UK (a key Irish market) have weighed on volumes. France (RSCA 0.39) and Denmark (RSCA 0.40) also display strong specialisation, while large economies such as Italy (RSCA −0.99) and Finland (RSCA −0.96) have negligible presence.

Export concentration increased even as import concentration fell

The HHI for exports rose from 1,505 to 2,453 (+62.9%), indicating that EU export activity became more concentrated among fewer member states — principally the Netherlands and, increasingly, Germany. This contrasts with the import side, where the HHI fell sharply (−47.3%). The EU thus became simultaneously more dominant and more internally consolidated as an exporter, while its small import base diversified.

Trade intensity and export propensity both doubled

The EU's trade intensity (trade as a share of production) rose from 42.5% to 86.9%, and export propensity (exports as a share of production) followed a nearly identical trajectory, from 41.9% to 86.8%. This means that by 2025, the vast majority of EU infant formula production was destined for export markets. The EU's net import reliance ratio deepened from −69% to −620%, reflecting the growing gap between its massive exports and its tiny imports.

Conclusion

The EU infant formula market (CN 190110) underwent a profound transformation between 2015 and 2025. While headline export values grew by 26.4%, this growth was entirely price-driven — volumes actually contracted by 3.7%, and unit prices rose by 31.2%. The most dramatic structural change was geographic: mainland China absorbed nearly €2.4 billion in EU exports by 2025 (up 95%), while Hong Kong's role as a re-export hub declined by 72%. Within the EU, production more than doubled, but export capacity consolidated around the Netherlands and, increasingly, Germany, while Ireland — still the most specialised producer — saw its exports halve. The EU's overwhelming net-exporter status intensified, with export propensity reaching 87% of production and the trade balance widening to nearly €4.9 billion. Looking ahead, the sector's heavy dependence on the Chinese market — which accounts for roughly half of all exports — represents both its greatest opportunity and its most significant concentration risk.