Optimistic forecasts for baby food and infant formula

Posted by AFN Staff Writers on 11th July 2012

The global baby food market is forecast to reach US$38.7 billion by 2015, according to a recent report by leading research group A.M Mindpower solutions.

Additional evidence, through observations of the baby food market in Australia and elsewhere, also supports the view that strong global growth rate in baby food markets is set to continue and will likely be driven from the Asia-Pacific region.

Trends in Australia – Pharmacy ‘home brands’ and organic products

In Australia, companies including Bellamy’s Organic, Cow And Gate Ltd, Danone, Del Monte Foods, Golden Circle Limited, H.J. Heinz Company, Kraft Foods Inc., Nestle, continue to dominate the market.

However, the recent advent of pharmacy ‘home brand’ baby food and infant formula is likely to provide growing competition for well-known brands.

An increasing demand for organic baby food and formula, met by companies such as Bellamy’s Organic, has also been noted by A.M. Mindpower Solutions in its report.

Trends in the U.S. – online shopping and baby cereal

According to A.M. Mindpower Solutions’ report, supermarkets account for a large percentage of baby food demand in the U.S. However, online shopping is also gaining prominence in this market, with sites such as Diapers.com, ezee.com, drug store.com, earthbest.com selling baby food and formula.

The research found that cereal is the largest product category in the U.S. baby food segment in terms of both value and volume. High growth is expected for organic baby food products in the coming five years with anticipated economy recovery and a increasingly educated population.

High entry barriers in the United States prohibit new entrants in the market which gives leverage to the existing players to keep high price for high demand baby products. Major players such as Nestlé, Abbott and Mead Johnson will, A.M. Mindpower Solutions predicts, continue to dominate the American baby food market for the near future.

Trends in China – domestic infant formula market challenged

China is the second largest baby food and infant formula market in the world and the largest in Asia, according to A.M. Mindpower Solutions.

The Chinese baby food industry is expected to grow at 16.57% CAGR in the next five years.

Meanwhile, the China infant formula market has undergone a period of major transition from high demand for milk powder in the domestic as well as in international markets to a sudden fall in retail sales from 2008 to 2010 following China’s melamine-tainted food scandal. The Chinese domestic milk formula market is facing challenges from foreign-owned brands which have become more popular.