Baby Food and Drink - UK - March 2018

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Inflation accelerates in 2017
Further decline for volume sales in 2017
Inflation and weak volume sales expected for 2018-22
Figure 1: UK retail value sales of baby food, drink and milk, 2012-22
Baby milk volume sales fall in 2017 for the second year running
Income squeeze threatens category growth
Societal changes impact baby food and drink
Companies and brands
Ella’s Kitchen remains in growth in declining baby food market
Own label gains ground
Figure 2: Leading brands’ shares in the UK wet and dry baby food market, by value, 2016/17*
Danone brands continue to dominate milk, but lose sales
Growth in L/N/R sugar claims
Vegetarian claims become more prevalent
Advertising spend falls in 2017
Aptamil continues its focus on achievements
The consumer
Most parents use both homemade and manufactured products
Figure 3: Usage of baby food and drink, by type, December 2017
In-store grouping by meal occasion is wanted by many parents
Sugar concerns affect the category
Figure 4: Behaviours relating to feeding babies/toddlers, December 2017
Parents have high trust in the medical profession, but little in brands
Figure 5: Trusted sources of advice on feeding babies and toddlers, December 2017
85% of parents switch between a small number of brands
Details on ingredient provenance appeal to many
Figure 6: Baby food and drink buying behaviours, December 2017
Few see own-label food as of lesser quality
Figure 7: Attitudes towards baby food and drink, December 2017
What we think
ISSUES AND INSIGHTS
Focus on ingredient provenance should help to build trust
The facts
The implications
Products with ethical aspects have strong appeal
The facts
The implications
Own-label is well-positioned to fly
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Inflation accelerates in 2017
Further decline for volume sales in 2017
Inflation and weak volume sales expected for 2018-22
Baby milk volume sales fall in 2017 for the second year running
Income squeeze threatens category growth
Societal changes impact baby food and drink
MARKET SIZE AND FORECAST
Inflation rises sharply in 2017
Further decline in volume sales in 2017
Rising prices and decreased promotional activity help to curb sales
Societal changes act as further hindrance
Lower inflation expected for 2018-22
Income squeeze leaves category exposed
Ageing population to diminish volume sales 2018-22
Figure 8: UK retail sales of baby food, drink and milk, by value and volume, 2012-22
Figure 9: UK retail value sales of baby food, drink and milk, 2012-22
Forecast methodology
MARKET SEGMENTATION
Further volume sales decline for baby milk in 2017
Figure 10: Retail value and volume sales of baby food, drink and milk, by segment, 2015-17
Weakness of wet baby food overshadows growth in dry
Consumer health concerns and lack of innovation hit baby drinks
MARKET DRIVERS
Decline in live births hits baby food and drink volume sales
Government immigration policies pivotal to volume sales growth
Figure 11: Live births in England and Wales, 2012-16
Various demographic factors influence volume sales
Falling fertility rates could have divergent effects
Ageing population and rise in older mothers to hinder volume sales growth
Multiple economic and financial factors affect the category
Steep inflation hike in 2017
Income squeeze leaves category at risk of cutbacks and switching
Figure 12: Annual percentage change in CPI and AWE (regular pay), by month, 2014-17
Breast feeding rate rises slightly in 2016/17
Unicef calls on Government to promote and support breastfeeding
Sugar concerns affect the category
Natural sugars are not held to ‘absolve’ high sugar content
PHE campaign puts the focus on calories in snacks
Lactalis product recall could put parents off formula milk
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Ella’s Kitchen remains in growth in declining baby food market
Own label gains ground
Danone brands continue to dominate milk, but lose sales
Growth in L/N/R sugar claims
Vegetarian claims become more prevalent
Advertising spend falls in 2017
Aptamil continues its focus on achievements
MARKET SHARE
Ella’s Kitchen holds its own in declining baby food market
Figure 13: Leading brands’ sales and shares in the UK wet and dry baby food market, by value and volume, 2014/15-2016/17
Figure 14: Leading brand owners’ sales and shares in the UK wet and dry baby food market, by value and volume, 2014/15-2016/17
Lack of innovation hinders Hipp
Own label gains ground thanks in part to increased NPD
Organix retains its lead in snacks but volume sales remain flat
Figure 15: Leading brands’ sales and shares in the UK baby snacks market, by value and volume, 2014/15-2016/17
Figure 16: Leading brand owners’ sales and shares in the UK baby snacks market, by value and volume, 2014/15-2016/17
Strong performances from Kiddylicious and Ella’s Kitchen
Danone brands continue to dominate baby milk but lose volume sales
Figure 17: Leading brands’ sales and shares in the UK baby milk market, by value and volume, 2014/15-2016/17
Figure 18: Leading brand owners’ sales and shares in the UK baby milk market, by value and volume, 2014/15-2016/17
New entrants heat up competition within the category
Growth in free-from market boosts Alpro’s baby range
Further decline for baby drinks
Figure 19: Leading brands’ sales and shares in the UK baby milk market, by value and volume, 2014/15-2016/17
LAUNCH ACTIVITY AND INNOVATION
No additives/preservatives remains the primary health claim
Cow & Gate promotes its yogurts for on-the-go use
Annabel Karmel innovates with chilled snack range
Figure 20: New product launches in the UK baby food, drink and milk market, by top twenty claims (sorted by 2017), 2013-17
Rise in L/N/R sugar claims in 2017
Little Dish launches cooking sauces
….and fruity cereal bars
Further growth in vegetable-based snacks
Smaller brands continue to turn to on-trend ingredients
Piccolo adds split-pot baby meals
Further growth in fortified claims
Baby milk and food brands relaunch and redesign in 2017
Brands use packaging redesigns to push health expertise message
For Aisha moves to highlight its health aspects more strongly
Figure 21: New product launches in the UK baby food, drink and milk market, by top ten brands (sorted by 2017), 2013-17
Heinz pushes its natural credentials in revamp of wet baby food range
Discounters remain the principal drivers of own-label NPD in 2017
Lidl rebrands its baby products range
Figure 22: New product launches in the UK baby food, drink and milk market, by branded and private label, 2013-17
Adult brands enter the baby food market, and heat up competition
Savsé claims European first with cold-pressed baby food
Organic brand launches pasta sauce for toddlers
Ella’s Kitchen pledges to make its pouches recyclable by 2024
ADVERTISING AND MARKETING ACTIVITY
Advertising spend falls in 2017
Figure 23: Total above-the line, online display and direct mail advertising expenditure on baby food, drink and milk (sorted by 2017), 2013-17
Aptamil continues its focus on achievements
Multiple brands use social media to engage consumers
Major and smaller players run classes and events
Aptamil encourages women to stay active during pregnancy
Various brands offer mother-and-baby socials
Piccolo links with the Trussell Trust on charitable initiative
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Most parents use both homemade and manufactured products
In-store grouping by meal occasion is wanted by many parents
Sugar concerns affect the category
Parents have high trust in the medical profession, but little in brands
85% of parents switch between a small number of brands
Details on ingredient provenance appeal to many
Few see own-label food as of lesser quality
USAGE OF BABY FOOD AND DRINK
Eight in ten parents use homemade food
Majority of parents use both homemade and manufactured baby food
Figure 24: Usage of baby food and drink, by type, December 2017
Time saving is a key motivation for using manufactured baby food
Younger parents are key users of manufactured baby food
Brands could push the ‘family time’ angle more strongly
Opportunities for baby food brands to extend into products for older children
Younger parents are the core users of baby/toddler snacks
Income squeeze threatens segment growth
Snacks retain users for longer than meals
Figure 25: Usage frequency for baby/toddler food and drink, by type, December 2017
Younger and better-off parents are the main users of formula milk
Parents’ trust in NHS advice limits usage of baby/toddler drinks
BEHAVIOURS RELATING TO FEEDING BABIES AND TODDLERS
More detailed in-store grouping is wanted by eight in ten parents
Brands use various methods to promote usage occasions
Figure 26: Behaviours relating to feeding babies/toddlers, December 2017
Sugar concerns affect the category
Naturally-occurring sugars are not seen to excuse high sugar content
Focus on sugar boosts the appeal of vegetable-based products
Strong interest in products made with ‘wonky’ fruit and vegetables
…but many parents will expect these to be cheaper than standard products
TRUSTED SOURCES OF ADVICE 
The NHS is the most widely trusted source of advice
Figure 27: Trusted sources of advice on feeding babies and toddlers, December 2017
EU rules prohibit recommendations from individual doctors or health professionals
Brands use various methods to showcase their professional links
Advice from family/friends is as valued as advice from professional nutritionists
Peer influence makes it essential for brands to safeguard their social media profile
‘Recommend’ a friend’ type schemes would help to harness the power of family/friend recommendations
Only 15% of parents trust baby food brands for advice
BABY FOOD AND DRINK BUYING BEHAVIOURS
85% of parents switch between a small number of brands
Promotions serve to undermine brand loyalty
…and also encourage stockpiling of a favourite brand
Figure 28: Baby food and drink buying behaviours, December 2017
Companies must find means to appeal other than price
Focus on provenance would help to build trust and quality associations
Charity pledges appeal to many
Widespread label scrutiny gives opportunities to clean-label products
Details on fruit/vegetable content are an enticement for many
ATTITUDES TOWARDS BABY FOOD AND DRINK
Income squeeze threatens category growth
Figure 29: Attitudes towards baby food and drink, December 2017
See-through pouches can help to build trust
Only a minority have negative views about own-label food
Endorsements from parenting groups would help to boost sales of own-label
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 30: Forecast of UK sales of baby food and drink, by value, best- and worst-case, 2017-22
Figure 31: Forecast of UK sales of baby food and drink, by volume, best- and worst-case, 2017-22
Figure 32: UK retail volume sales of baby food and drink, 2012-22
Forecast methodology
APPENDIX – MARKET DRIVERS
Figure 33: Live births to non-UK born mothers, by percentage of total births, 2012-16
Figure 34: Total fertility rate in England and Wales, 2012-16
Figure 35: Live births in England and Wales, by age of mother, 2012-16
Figure 36: Mean age of mother at childbirth in England and Wales, 2012-16