Baby foods try a new direction

The Lempert Report
March 11, 2013

What’s a category to do when users move on after only about a year of consumption? 

What’s a category to do when users move on after only about a year of consumption?  No problem when the new users—babies—are born at prolific rates. Big problem when birth rates dip in sync with weak economies.   Financial distress has led to record low births in the United States in 2011 after a steady decline since the recession hit in 2008.  Similarly, 15 of 22 European countries post lower fertility rates since 2008 vs. gains in 19 of the 22 nations during the prior three years, according to The Wall Street Journal.  In the U.S., all-outlet dollar sales of baby food are nearly $100 million below the 2009 level, according to Nielsen data.  To offset the sales loss and potentially drive growth, some manufacturers have pushed two initiatives:  more organics, which account for a robust 21% of category sales and new, convenient pouch packaging of foods in combination flavors. If pouches help premium baby foods appeal to toddlers and older children, and extend their period of productive consumption, that would be a big win for the category.  If pouches sell at higher prices than jarred baby foods without heavy promotions, this too would raise shelf performance.  We like the long shelf life (about 4 months) and the absence of artificial colors (no need for them because contents aren’t visible).  However, two other aspects that concern us may well concern a good portion of parents: The sucking of food product doesn’t teach good eating habits.  The pouches and plastic caps could be detrimental to landfills.  Those issues aside, moms and dads will soon show where they side on these issues, and whether these innovations can bring growth to a stalled category.