Low birth rates soften baby milk sales

July 12, 2011

The category tonic will be couples confident in the economy and willing to make babies.

A seven percent plummet in the U.S. birth rate – from 4.32 million births in 2007 to an estimated 4.01 million births in 2010 – may be due to rise again if the economy improves, suggests the latest quarterly U.S. Fertility Forecast from Demographic Intelligence, which supplies demographic insights to the juvenile products industry.

DI believes U.S. births bottomed out in 2010. If so, that would be good news for the $3 billion (annual sales) baby milk and milk-flavoring category, which has declined during the past two years. In U.S. food, drug and mass merchandiser stores (including Walmart), dollar sales of the category overall fell 4.2% to $3.08 billion in the 52 weeks ended June 11, 2011, according to Nielsen data. This followed a 7.3% drop in dollar sales during the prior 12 months.  Equivalized unit volume (EUV 16-ounce basis) was also down, by 8.5% a year ago and by 1.0% in the latest period.

The public’s interest in breastfeeding also affects category performance. Three out of every four new mothers in the U.S. now starts out breastfeeding – although breastfeeding rates at six and 12 months as well as rates of exclusive breastfeeding at three and six months remain stagnant and low, reports the Centers for Disease Control and Prevention. CDC states “most mothers in the U.S. want to breastfeed and are trying to do so…[but they] continue to face multiple barriers.”  

The Healthy People 2010 targets are to increase the proportion of mothers who breastfeed their babies: to 75% in early postpartum, to 50% at six months, to 25% at 12 months, to 40% exclusively through three months, and to 17% exclusively through six months, according to the CDC report.

Two signs of opportunism associated with breastfeeding and breast milk:  A toy company introduced The Breast Milk Baby in the U.S. this spring to “teach children the nurturing skills they’ll need to raise their own healthy babies.” An ice cream parlor in England paid 15 women for their breast milk and concocted the ‘Baby Gaga’ treat for $23 per serving, according to Reuters.

Meanwhile, across all milk types and product forms tracked by Nielsen, dollar sales of baby milk and milk-flavoring were largely down in FDM (including Walmart) for the 52 weeks ended June 11, 2011. For example:

By milk type 
Cow’s milk dollar sales slid by 3.9% to $2.56 billion, even though EUV was up 0.6% in the latest period; this followed a 5.2% dollar sales drop on a 6.4% EUV fall the year before. Soy milk dollar sales fell by 16.9% and 9.0% to $322.7 million in successive years, on consecutive 21.2% and 11.2% EUV tumbles. Hydrolysate/hydrolyzed protein/protein hydrolysate dollar sales were down by 12.1% and 13.8% to $102.8 million in the two latest 52-week periods, on successive 5.9% and 15.9% EUV slides, the Nielsen data show.

By form
Powder dollar sales fell by 5.9% and 4.1% to $2.69 billion in the two most recent years, on two successive EUV drops of 5.9%. Ready-to-use dollar sales were up 8.4% most recently to $217.3 million on a 21.5% EUV increase; this followed a lackluster year in which dollar sales fell 5.3% on a 3.5% EUV dip. Concentrate dollar sales tumbled by 23.7% and 17.5% to $168.1 million in two straight years, on 25.3% and 15.8% EUV falls.