Rising concerns among parents about side effects of chemical ingredients in baby foods have been encouraging consumers to adopt organic alternatives. There is an increased focus towards clean label trends, which is expected to bolster demand for plant-based ingredients. As per a study by Future Market Insights (FMI), the sales of organic baby foods are set to rise strongly in the years ahead. The market is expected to reflect a double digit CAGR through 2021 and beyond.
The demand for milk formula products is expected to be the highest. It is likely to account for a CAGR of approximately 20% in 2021. Applications as supplements to breast milk will continue fuelling demand for these products.
Organic baby food producers aim for nutrients rich profiles in formulations, in a growing range of flavors and targeted age group demographics. Following the covid-19 pandemic sales through online channels have witnessed an upsurge, which is unlikely to change through 2031.
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Major investments by governments towards urbanization and the rapid transition of rural populations to urban centers is creating increased potential for organic baby food sales. Consumer health and environment consciousness will contribute to greater demand for the foreseeable future.
Key Takeaways from BRIC Organic Baby Food Market Report
- The demand for milk formula products is expected to witness a consistent rise, enabling the market register an exponential double digit growth rate between 2021 and 2031.
- Sales through retail supermarkets will drive revenues in the industry, supported by robust supply chains.
- The Chinese and Indian markets for organic baby foods is a key contributor to revenues on the back of large infant populations.
- Increasing demand for vegan products will bolster growth in Brazil
- Government initiatives undertaken to aid infant health will support growth in India and South Africa.
“Easy availability of essential raw materials in countries of BRIC region, with major agrarian economies are used for the production of organic commodities. Brazil, China and India are displaying significant developments in the field of organic farming. Furthermore, increasing trade in multiple sectors in the BRIC region is likely to bolster growth of the organic baby food market. This can be widely attributed to increasing levels of investment and liberalization of trade, which opens new avenues for sales and distribution,” said a lead analyst at FMI.
Brand Positioning in Terms of Health Claims Creates Opportunities
Sales of baby food products are largely reliant on health claims made by brands, with information about the pros and cons of breast feeding clearly stated and available through the internet. Some of the more prominent structural and health claims used by brands include information on digestibility and characteristics associated with immune systems and growth.
Many products also come with recommendations to seek the advice of healthcare professionals prior to feeding baby foods to children below the age of 1 year, which also clearly stating the advantages of breast feeding. Also high levels of concern among parents about obesity, and added sugar and salt are key to labelling practices in the industry. While TV and radio are not given much importance, social media channels are gaining ground for promotional activities.
Warnings and recommendation labels are more common on milk supplement products over the adequate and correct use of these products, especially for toddlers transitioning to solid foods. These trends are expected to have a significant impact on developments within the industry.
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Who is Winning?
Leading players in the BRIC organic baby food market include but are not limited to H.J. Heinz Company, Nestle S.A, British Biologicals, Groupe Danone, Bellamy’s Australia Limited, Abbott Laboratories, Campbell Soup Company, Otsuka Holdings Co., Ltd. Major players are seeking to expand production capacities, widen product portfolios and geographical reach in a bid to edge out conventional baby food product manufacturers.
For example, Serenity Kids announced a US$ 3 million investment round in December 2020, aimed towards the expansion of organic baby food portfolio. Nestle, in September 2020, announced plans to expand its infant formula production operations in Russia with an investment of US$ 45.8 million including a full cycle factory in Vologda. In January 2021, Timios, based in India announced the launch of its organic baby porridge product to add to its portfolio of toddler snacks including energy bars, pre-probiotic bites, and melts.