Baby food players face challenges ahead given the unfavourable sociodemographic conditions, which will result in reduced volume sales growth opportunities. Therefore, premiumisation strategies will be paramount, driven by greater focus on innovation, including clean label and organic propositions that will grow alongside premium niches such as goat milk and plant-based offerings. Segmentation towards older age groups will also be increasingly necessary to sustain value sales.
This report comes in PPT.
Birth rates and the infant population aged 0-4 years are set to decline globally, which poses important challenges for the baby food industry; hence, premiumisation should be an essential part of growth strategies. On the flip side, the number of working mothers and households headed by a woman will increase, which will benefit the convenience that baby food brings.
Standard and follow-on milk formula are set to face challenges in most regions given unfavourable demographic factors and the increasing number of campaigns promoting breastfeeding, so it is essential to focus on the key pockets of growth in the category that include growing-up milk formula in the Americas and special milk formula in Asia, Europe and Latin America.
Baby snacks (in other baby food) represent another important growth space in the baby food industry. Products like yoghurt melts, puffs, fruit slices and crunchies are becoming more and more popular among new mothers in markets like China. This category is also set to grow positively in Western Europe and North America, despite it being more established than in other regions.
Meeting consumer demands will be essential to win in the baby food industry. Parents continue to prioritise clean label offerings, looking for “all natural” and “free from preservatives” claims. Limiting sugar intake is also crucial for parents globally, having grown in importance over the last couple of years. Innovation in organic and plant-based baby food will also continue to gain ground.
E-commerce accounts for 20% of retail sales globally for baby food in 2022, which is double the share in 2017. This penetration is well above the average for dairy products, where e-commerce only accounts for a 3.5% share of global retail sales in 2022. Opportunities abound in this space as home delivery has been particularly appealing to the new tech-savvy generation of parents.
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