The baby food market has been growing consistently, however it has been experiencing phenomenal growth since 2003. In 2005 the worldwide baby food market was worth $21 billion (Au), up from 9.5 billion in 2003. The North American accounts for 25% of the market, Europe 27%, and Asia-Pacific accounts for 25% of the global market value.(1)
Au Baby Food Market
The nature of the baby food market in the au has changed over the last few years. Historically, a few big players dominated the market but a few companies have emerged to target specific niche markets for more fresh’ and organic alternatives.
Due to the increase in the number of competitors and fact that the baby food product usage cycle is relatively short, manufacturers are creating new customer segments such as “toddler cuisine”. Industry analysts believe that baby/toddler foods and drinks that are able to capitalize on convenience as well as offer premium quality and ingredients will perform well, as parents often want to buy want is best for their child and are willing to pay a high price for specially formulated products to ensure complete nutrition and a healthy balance.(2)
Market Growth Drivers
There are many factors that are driving the growth of the baby food market. They are: family planning methods, financial planning before the birth of a child, late pregnancy options exercised by women, the increase in the number of working women, and an increased willingness of consumers to pay for premium quality, organic products.(3)
Parents, moms in particular, believe that “organic” and “all natural” labels are “very important” when making food decisions for their baby.(4) It is often the case that baby foods/drinks are the first types of organic products to be brought into a household.(5)
Although there are a number of jarred organic baby food brands, such as Earth’s Best and Tender Harvest available in stores today parents who are committed to offering their children the best, healthiest choices know that commercial organic baby foods are not fresh and, in order to have a longer shelf-life, they are cooked at temperatures that destroy many of the vitamins and nutrients.
Because good quality organic baby food is not available in stores many parents are choosing to make homemade baby food. At the same time, dozens of homemade baby food websites have popped up.
Emerging trend: Frozen organic baby foods
In response to the short comings of jarred baby food, a new alternative locally made, frozen organic baby food – is starting to emerge in trend-leading cities such as New York, Los Angeles, and San Francisco. Each of these companies has taken a significant step forward.
For these companies market introduction has a number of challenges. To effectively sell products through grocery stores they must pay distributors and store placement fees. To maintain profitability they must reduce production costs by using co-packers to make their food. Co-packers require large monthly production minimums, cold storage fees, and the baby food companies loose control over the manufacture of their products. And companies must make very large investments in advertising so customers know to look for them in the frozen food section of their local grocery store.
All parents want what is best for their new babies. US spending on babies is a $28 billion industry. Families spend over $11,000 during the first year of a baby’s life on baby products alone.(6) This desire extends beyond cute clothes and fun toys and reaches into the kitchen and baby’s first foods.
Numerous studies have shown that eating patterns and food preferences are established early in life.(7) Dissatisfied with the preservative and sugar-filled baby food options available in grocery stores, parents are looking for new feeding alternatives.
A growing number of parents are turning to organic foods not only for personal health reasons but for environmental reasons as well. The organic baby food market grew nearly 18 percent in 2004, double the overall growth of organic food sales. (8) According to AC Neilsen, over the past five years, the organic baby food market has grown by more than 60 percent, generating more than $100 million in sales in 2005. This growth is driven by concerns that parents have about the level of pesticides and hormones in their baby’s food.
In recent years many parents have also started to at least have the intention of making their own baby food. But working parents and active, busy families don’t have time to shop, peel, steam, puree, strain, and freeze homemade baby food themselves–it is just too time consuming. According to a recent work/life balance study conducted by CareerBuilder.com, one-in-four working moms said they are dissatisfied with their work/life balance and are actively seeking ways to obtain more flexibility, and some will do it at any cost. Fifty-two percent of working moms say they would even be willing take a pay cut to spend more time with their children, a significant jump from 38 percent last year.
New Baby Food Companies
Over the past few years a number of new baby food companies have popped up all over the world to help meet the market need for quality baby food products. Some are attempting to go head-to-head against the baby food giants in chain grocery stores. Some are opening “baby food boutiques”. While a few others are focusing on baby food catering services.
(1) Baby Food Industry (2006), Datamonitor/RNCOS.
(3) Baby Food Market Organic and Inorganic: A Market Study, Datamonitor/RNCOS
(4) Baby Food Market An Outlook, March 2005, Datamonitor/RNCOS
(5) Baby Food and Drink, October 2006, Datamonitor/RNCOS
(6) Health and Human Services Department, 2004. US Department of Commerce.
(7) Helping Children Develop Health Eating Habits, University of Maryland School of Medicine, June 11, 2003.
(8) “Organic Food on Parents’ Grocery Lists: Concerns About Pesticides, Other Toxins in children’s Diets Driving Demand”, Seattle Post-Intelligencer, November 24, 2005
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