Nestlé To Close Infant Formula Plant As China Birth Rate Drops

Nestlé has announced the impending closure of its baby formula production plant, a decision driven by the stark decline in China’s birth rate, highlighting the extensive effects of the nation’s demographic challenges.

The leading global food corporation confirmed on Wednesday its intentions to cease operations at its Wyeth Nutrition baby formula facility in Askeaton, Ireland, by the start of 2026 unless a purchaser emerges.

This factory exclusively manufactures infant formula to export to Asian markets.

This development sheds new light on the potential impacts of China’s declining population on Western companies doing business there.

The burden of an increasingly elderly population is already slowing China’s economic progress, with the prospect of a diminishing labour force posing long-term risks to the country’s economic and social stability.

“The number of newborn babies in China has declined sharply from some 18 million per year in 2016 to fewer than 9 million projected in 2023,” Nestlé conveyed in a statement.

“The market, which had previously been reliant on imported infant formula products, is also seeing rapid growth in locally produced products.”

The company also plans to terminate operations at a research and development segment located at the site a year prior. Tasks from both divisions will be relocated to current establishments in China and Switzerland.

With these impending shutdowns, 542 jobs are at risk, and Nestlé has declared the initiation of discussions with the staff involved.

“In parallel, during this consultation we remain open to approaches from a credible buyer,” the company stated

Nestlé’s global revenue has been under pressure this year due to an uptick in the cost of its offerings, which range from Nescafé coffee to KitKat chocolate bars.

The company disclosed its sales data for the initial nine months of the year on Thursday, revealing figures that fell short of market forecasts, prompting a decline in its stock value by over 2%.

Sales experienced a 7.8% increase compared to the previous year on a comparable or “organic” scale, which negates the effects of mergers, currency fluctuations, and other variables, with a noted price jump of 8.4%.

“(Sales) growth was driven by pricing as we continued to navigate historic inflation levels,” CEO Mark Schneider shared in a statement.

By a more straightforward metric, overall revenue dipped by 0.4%, landing at 68.8 billion Swiss francs ($76.6 billion).

In an unrelated note, Nestlé mentioned the brief cessation of activities at one of its plants in Israel for safety reasons, though it’s currently back in operation.