The Chinese infant formula market is cooling with dwindling sales. Falling birth rates and domestic endorsements of breastfeeding won’t help sales flourish soon

Reckitt Benckiser (RB) has sold off its Chinese infant formula and child nutrition (IFCN) business, acquired in 2017 as part of its US$17.9bn takeover of Mead Johnson, following a strategic review and struggling sales. Reckitt is selling the business to private equity firm Primavera Capital Group and includes manufacturing sites in the Netherlands and China. Primavera will have royalty-free and exclusive licence of the Mead Johnson and Enfa family of brands in China, includes Enfinitas, Enfamil and Enfagrow.

RB expects to suffer a £2.5bn loss from the sale with a reassessment of goodwill and intangible assets. The CEO Laxman Narasimhan said Reckitt’s Nutrition business would have better, more consistent growth and margin profile as a result of the divestment.

Reckitt will retain an 8% stake in the business which was sold to Primavera for US$2.2bn and expects net cash proceeds from the divestiture to be around US$1.3bn. The deal is subject to regulatory approvals and is expected to be completed in the second half of 2021.