Pricier packs drive value in babyfood

Insects in muesli, the sugar tax and the ‘breast is best’ brigade – it’s been another challenging year for the ever-controversial baby food category. But the broadly positive performance suggests the market is coping well.

Babyfood volumes are down overall, but the value of the top three brands has grown, thanks in no small part to the continuing popularity of pouches. The format has increased its market share to 41%, up from 36% last year and 31% two years ago.

Babyfood market leader Ella’s Kitchen – which has added almost £10m in the past 12 months – agrees pouches have been a key category driver. The supplier adds that a reduction in volume-driving deals has impacted market growth and suggests that, with only “25% of baby meals ready-made”, overall category consumption could be increased through “better quality innovation”. 

But there simply hasn’t been a lot of new product development, says Nielsen analyst Hannah Chapman, adding that NPD has contributed just 3.4% of category value over the past 12 months.

In more recent months, however, Hipp has been busy on the innovation front, releasing Mix Me fruit and cereal pots in September. It also launched three pasta tray meals in August to build on its 44% share of the tray market – the only format in value growth other than pouches, it says.

The standout NPD performance in the trays format, according to Nielsen, has been the Heinz’s Little Kidz Trays (a rebrand of the Mum’s Own range of Trays), which delivered £1.3m in incremental value to the category.

“It is crucial a brand adapts and innovates,” says Heinz infant feeding brand manager Gaelle Vernet, highlighting the launch of Heinz’s “industry first” pouch with a 50% wider spout in August. The new format is designed “to allow little ones to eat chunkier textures”.

Fancier packaging has contributed to price increases, with Chapman pointing to an average 32p/kg price rise in the category overall, largely a result of the popularity of premium pouches, which carry an average price of £8.55/kg.

Even the discounters aren’t bringing average prices down. While the likes of Aldi and Lidl are eating into category shares in many parts of the grocery market, they are “not important in this sector”, says Chapman, adding the discounters account for 7% of market value (even if Aldi is, inevitably, in strong growth).

“Consumers are willing to pay a premium in this market for branded products they trust and that give them reassurance,” says Organix MD Anna Rosier. She adds﷯ that the performance of Organix Baby Biscuits, launched this summer, has already begun to reverse the declining fortunes of the baby biscuits category. “It had been in free fall due to commoditisation of leading brands by pricing, consumer boredom with the traditional finger shape format, and the switch to cheaper own-label alternatives,” she adds.﷯

Another brand enjoying success is Kiddylicious, which has seen its overall sales increase by almost a third in the past year. In ﷯February ﷯it introduced Wafers as an alternative to old-﷯fashioned rusks. Made with rice flour and ﷯less sugar than the ﷯traditional ﷯rusk, they ﷯chime perfectly with the anti-sugar movement. Kiddylicious claims Wafers have already grown to 34% the size of Farley’s rusks in eight months﷯.

Baby juice, meanwhile, sits less happily with the anti-sugar lobby. After suffering in 2014, with volumes falling 21%, in 2015 they have dropped a further 25%. Heinz is trying to perk things up by adding new recipes to its juice lines, but the future for baby juice doesn’t look good as things stand, and Cow & Gate withdrew its baby juices from the market in 2014 due to their high sugar content.

“Now 90% of our foods portfolio does not contain added sugar” says a spokeswoman for Cow & Gate owner Danone Nutricia Early Life Nutrition. “We are committed to reducing levels further in 2016.”

Recalling a batch of Cow & Gate muesli in October – after consumers reported finding insects in packs – will have given Danone Nutricia a headache, but the performance of its baby milk brands will have eased the pain.

The supplier dominates the baby milk market, taking the top five spots in the category with products from its Cow & Gate and Aptamil brands. Between them, they have contributed the bulk of a £51.7m surge in the value of the market. Aptamil, in particular, has had a strong year, which Danone attributed to a revamp of the product mix, with Aptamil ready-to-feed milks given new packaging making it easier to feed on the move.

With birth rates having recovered from a “one-off” drop in 2013, Danone Nutricia says the overall baby category is looking perky. And the numbers bear that out.

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