China’s demographic crisis is causing Nestlé to close a plant that makes baby formula, citing a sharp drop in birth rates.

According to a statement Wednesday, Wyeth Nutrition’s infant formula factory in Askeaton, Ireland, will close by the first quarter of 2026 unless a buyer is found. Infant formula products are exclusively exported to Asian markets.

The announcement sheds light on how Western firms selling goods and services in China might be affected by China’s population decline. There is already an aging population weighing on China’s economic growth, and policymakers are worried that a shrinking workforce will threaten economic and social stability.

Nestlé said in a statement that the number of newborns in China has plummeted from 18 million in 2016 to fewer than 9 million projected in 2023. Locally produced infant formula products are also experiencing rapid growth on the market, which previously relied on imported products.

Nestlé’s research and development center at the plant will close a year earlier. The work at both facilities will be transferred to existing factories in China and Switzerland.

Nestlé said it would begin a “consultation process” with employees regarding the planned closures. Additionally, the company added, “we remain open to approaches from a credible buyer during this consultation.”.

Prices for Nestlé’s products, such as Nescafé coffee and KitKat chocolate bars, have increased this year, hurting its global sales.

Analysts’ expectations for sales growth in the first nine months of the year were missed by the company Thursday, sending its shares down more than 2%.