Monday, March 03, 2008

Cut throat competition building a US$20 billion baby food market

There is a new report out analysing the global baby food industry from the financial point of view.

There are extracts on this website:

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It states: "Global baby foods and infant formula market is projected to witness steady growth through the forecast period and reach US$20.2 billion in sales by 2010. Although US and Europe are the leading markets for baby foods and infant formula products, these developed regions offer little opportunities for growth due to the declining birth rates, static market conditions, and consolidation. As a result, manufacturers are moving towards the more lucrative and populous markets in Asia-Pacific, and are currently focusing their efforts on India and China."


Companies engaged in production of baby foods face cut throat competition, particularly on the innovation platform. Each company is focused on gaining a competitive edge over rivals by introducing new products into the markets from time to time. Major companies operating in the global market for baby foods and infant formula include Nestle, Numico, Abbott Laboratories, Bristol-Myers-Squibb, Gerber, Heinz, Danone, and Hipp. Nestle, Danone, Heinz and Royal Numico. Among these, Nestle is a dominant player with global presence.

Europe represents the leading regional market for baby foods and infant formula products for 2007, capturing more than 30% share of the global sales, as stated by Global Industry Analysts, Inc. However, the large population base in developing regions, particularly India, China and Brazil, is expected to facilitate in shifting the focus of manufacturers to these regions. As a result, Asia-Pacific is projected to emerge as the fastest growing regional market over the 2001-2010 period, driven primarily by the exceptional sales in the Chinese market. Europe would continue to retain its position as the leading baby meals market by 2010, with sales projected to reach US$2.1 billion.

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The cut throat competition between companies to grow their market share, results in the type of aggressive marketing practices exposed in the monitoring report produced by the International Baby Food Action Network (IBFAN) called Breaking the Rules, Stretching the Rules.

Nestlé comes in for special mention here too, for being the worst of the baby food companies.

We have also seen the efforts of NUMICO, now owned by Danone, to compete with Nestlé in the asian markets has led to more violations coming from its group of companies.

While the portrayal of artificial feeding as modern and helping to develop intelligence is only part of the story, it is no doubt contributing to the declining breastfeeding rates seen in China. For a recent blog on China see:

If you want to see the full financial analysis report you can order it here:

It costs US$4450 so I'm not sure we'll get to see a full copy.

The IBFAN report is much more reasonably priced. You can order it here:

It costs £25 for non-profit use (not including investment planning) and £75 for profit use.

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