From the pureed food on spoons to the formula in bottles, you’d be hard pressed to find a parent who didn’t want the best for their baby. And they’re willing to spend for it. In fact, Nielsen estimates global baby food and formula sales around the world will reach nearly $30 billion in 2015*.
But for baby care manufacturers, there’s plenty at stake in the battle for baby bucks. Globally, births are declining across all regions. Between 1960 and 2013, birthrates around the world declined 45% on average, according to the World Bank. But there are still opportunities in the baby care market. Over 80% of the world’s population lives in the developing world, and while global birthrates have steadily decreased across all regions and economic levels over the past 55 years, they remain highest in developing countries. In addition, rapid urbanization, the growth of the middle class and rising rates of female participation in the labor force in many developing markets has encouraged the adoption of convenience-oriented lifestyles, making baby formula and prepared baby foods more desirable.
Today, 49% of baby food value sales come from Asia-Pacific, 27% from Europe and 19% from North America, but Latin America and Africa/Middle East are growing faster. In the baby food category, over the 12 months ending December 2014, value sales grew 4.9% over the previous year in Africa/Middle East and 2.1% in Latin America. In Asia-Pacific, sales results were mixed. While value sales grew in Indonesia (4.6%), India (3.8%) and Taiwan (1.6%), they declined in China (-5.1%), driven primarily by consumers shifting to e-commerce and baby-specialty stores, which are not reflected in this data set.
In the baby formula category, developing-market growth was even more impressive. In the 12 months ending December 2014, value sales grew by double-digits in Latin America (37.3%), though this figure does not take inflation into account, and Africa/Middle East (16%). These regions also have some of the fastest-growing markets in terms of formula volume sales. In Europe, value sales grew 7.3%, with double-digit growth in Germany, driven primarily by exports to China. While several markets showed strong growth, more declined.
Packaging innovation and organic options drive sales
In terms of packaging, products in tubs or glass make up the vast majority of global baby food value sales (87%) in 16 select markets. But when it comes to growth, pouches (containers with plastic spouts at the top from which foods can be sipped) are all the rage, with value sales increasing 28% between December 2013 and 2014. In fact, pouches grew by triple digits in the Ukraine (916%), Brazil (528%), Portugal (316%), Russia (264%), the Netherlands (184%) and Spain (125%). In the U.S.—the largest pouch market by a wide margin—sales grew 7% over the previous year. Sales for products packaged in tubs or glass, on the other hand, were flat worldwide and declined in the majority of markets analyzed, including the U.S. (-2%).
“The popularity of pouches is largely driven by their ease and flexibility,” said Liz Buchanan, director, Global Professional Services, Nielsen. “Pouches provide convenient, portable nutrition that’s extremely compatible with consumers’ on-the-go lifestyles, and they promote self-feeding and independence.”
Meanwhile, the organic sector is also experiencing strong growth. Global value sales increased 26% over the past two years in the 16 markets examined, while non-organic products declined 6%. North America is the largest organic market, accounting for 72% of value sales over the past 12 months.
“Consumers are increasingly health conscious and looking for natural, minimally-processed foods, and the stakes are even higher when it comes to their babies” said Buchanan. “More parents are seeking foods that set their children up for a healthy life—even if it comes at a premium. We expect this segment will continue to grow as more parents can afford to trade up.”
Other findings include:
- Word-of-mouth communications is the most commonly cited source for information about baby food/formula.
- Fifty-one percent of diaper value sales come from North America and Europe, but the most rapid growth is happening in developing countries.
- Asia-Pacific leads global respondents who say they purchase baby care products online.
- Skin protection and comfort are the most important diaper purchase considerations among global respondents.
For more detail and insight, download Nielsen’s Global Baby Care Report.
*Based on Nielsen sales data for infant nutrition and infant cereal categories in 32 countries and and infant formula in 36 countries, which cover an estimated 70% of global baby food and formula value sales.
About the Nielsen Global Survey
The Nielsen Global Baby Care Survey was conducted Feb. 23 – March 13, 2015, and polled online respondents in 60 countries who have made a baby care purchase in the past five years throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on its Internet users and is weighted to be representative of Internet consumers. It has a margin of error of ±0.6%. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% Internet penetration or an online population of 10 million for survey inclusion. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.