Nestle plans to close a plant in Ireland that makes baby formula, citing a sharp drop in China'sbirth rate, in a fresh example of the far-reachingimplicationsof China'sdemographic crisis.
The largest food company in the world announced Wednesday that its Wyeth Nutrition Infant Formula factory in Askeaton in Ireland would be shut down by 2026's first quarter if a buyer is not found. The factory produces infant formula exclusively for markets in Asia.
This announcement provides new insights into how the decline of China's population may affect Western companies that sell goods or services in China. China's economy is already being impacted by an aging population, and policymakers worry that a shrinking labor force could have a long-term impact on economic and social stability.
Nestle released a statement saying that the number of babies born in China had dropped sharply, from 18 million in 2016 to less than 9 million in 2023. Nestle said in a statement that the market was previously reliant upon imported infant formula. However, local products are now growing rapidly.
Nestle's research and development centre at the factory will close a year sooner. Both facilities will have their work shifted to factories in China or Switzerland.
Nestle has said that the planned closures will put 542 jobs in danger. It plans to begin a "consultation process" with its employees. The company said that during the consultation process, it would remain open to offers from credible buyers.
Nestle's global sales were hurt by the rising price of its products this year, including Nescafe and KitKat bars.
The company reported Thursday that sales growth for the first nine-months of the year fell short of analysts' expectations. This sent its shares down more than 2%.
Prices rose by 8.4%. Sales increased 7.8% on an 'organic basis', which excludes acquisitions, changes in exchange rates and other factors.
Mark Schneider, CEO of Schneider Electric Company, said that the growth in sales was driven by price as they continued to manage historic inflation levels.
Total sales dropped 0.4%, to 68.8 billion Swiss Francs ($76.6billion).
Nestle also announced that it temporarily closed a factory in Israel for 'precautionary reasons', but the plant is now back up and running.