Baby Food—No Child’s Play for Established Companies

New, better-positioned brands are emerging on the global prepared baby food market, all appealing to parents wanting the best for their little ones. And while it's true that big companies still dominate the sector—Nestlé, Kraft Heinz and Danone have a combined market share of 47.2%— their shares are dwindling and are down from 52.7% in 2010. We see three major developments and opportunities in the global baby food market.

Picture of adult feeding child

1. A market that is learning to walk in developing countries

In developing countries, baby food sales are set to rise. Traditionally, baby food has mainly been prepared in the home by parents . Keeping costs down, ensuring food is safe to eat (and knowing where it comes from), along with having the time to prepare baby's meals have all played a role in this development. But with more women entering the workplace, increased urbanisation and rising income levels, convenience is also steadily becoming an important factor, paving the way for growth in the prepared baby food market in these countries. 

2. A new-born category in developed markets

In the past few years, new brands have gained market share over more traditional brands. In the US, Nestlé’s Gerber has lost quite a bit of ground to new (often organic) alternatives such as Hain Celestial’s Earth's Best, while less familiar labels such as Plum Organics, Happy Family (formerly Happy Baby) and Ella’s Kitchen have all recently been acquired by, respectively, Campbell's, Danone and Hain Celestial.

Market share development, 2010-2015

Transparency, naturalness and the health aspect are particularly important in this category—and this is exactly what these new brands have played into. Consumers are increasingly becoming aware of the relationship between food and health. And if any food category is scrutinised, it is definitely the food people feed to their infants. 

3. A juvenile distribution channel: online

The online channel is increasingly becoming an important distribution channel for food. On the list of heavy users of online retail, families with young children rank first. Time-pressed young families often find convenience, efficiency and broader assortments when shopping online. As a result, baby food is one of the categories that over-indexes in online retail. This is why baby food producers need to focus on this fast-growing channel and rethink their marketing, packaging and supply chain strategies.

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