CHINA – Nestlé has revealed its plans to close an infant formula factory in Askeaton, western Ireland, and its co-located R&D center, citing the declining birth rate in China as a key factor behind the decision.

The closure is slated to take place in the first quarter of 2026 for the factory and the first quarter of 2025 for the R&D center.

The factory, operating as Wyeth Nutritionals Ireland Ltd (WNIL), currently employs 491 workers, while the R&D facility has 51 staff members who are at risk of redundancy as a result of this move.

Nestlé has indicated that despite its efforts, it has been unable to secure a buyer for the facility but remains open to approaches from credible buyers during the consultation process.

The decision to close the Askeaton factory and R&D center comes in response to “external trends” that have significantly affected the demand for infant nutrition products in the Greater China region.

The number of newborn babies in China has seen a sharp decline, dropping from approximately 18 million per year in 2016 to a projected fewer than 9 million in 2023.

China’s birth rate for 2022 reportedly dropped to its lowest level since 1949, with 9.56 million babies born. Last year, China’s population also began to decline for the first time in decades.

With 1.09 births per woman, China’s birth rate keeps on declining and has been lower than EU countries’ birth rate since 2019.

Such a sharp decline naturally leads to less demand for infant formula. But Nestlé also says demand for locally-produced powdered milk is growing.

In 2008, a melamine crisis impacting local infant formula manufacturers in Mainland China resulted in eroded consumer confidence in locally produced products.”

Since then, Chinese authorities’ efforts to restore confidence have boosted locally-produced formula sales.

To adapt to these changing market dynamics, Nestlé intends to transfer production to two of its existing factories, one located in Suzhou, China, and the other in Konolfingen, Switzerland.

Furthermore, the R&D work currently conducted at the Askeaton site will be relocated to the Konolfingen facility. Nestlé also plans to strengthen its satellite R&D center in Shanghai.

The Askeaton factory and R&D center were acquired by Nestlé as part of its purchase of Pfizer Nutrition for US$11.85 billion in 2012.

Nestlé reported “high single-digit growth” in its infant nutrition business for the first nine months of 2023, with contributions from various brands and geographic regions.

In Asia, Oceania, and Africa, infant nutrition was the largest contributor to growth, led by brands like Lactogen, Nan, and Cerelac.

Nestlé expressed regret over the impact this decision will have on its employees and their families and pledged to provide full support throughout the process.