Baby Cereal Food Manufacturing Industry. Start a Profitable Baby Food Production Business

Baby Foods are those foods which are given to babies and infants for their sustenance during the few nascent years of their lives and can be demarcated into two types comprising of Infant Formula and Baby Foods. Infant Formulas serve as a replacement of mother’s milk as it emulates the nutritional attributes of a mother’s milk. And, baby foods are soft minced and mashed vegetables, fruits, meats, cereals, etc. for babies consumption and are sold in the form of purees or powders (to be consumed with the addition of water) and snacks.

Baby foods are essentially the first alternative to the breast milk during the growth and development of babies. Purees of natural fruits and vegetables are given as nutritional food for babies initially. As they grow, the baby food available for them varies from infant formula to solid dried baby foods. Currently, health conscious parents are opting for organic baby foods over conventional baby food.

There are mainly three forms of baby food, which are liquid concentrate, powder, and ready-to-feed. The powder is the least expensive form and it is used by mixing with water before feeding the infant. In the case of the ready-to-feed form of baby food, there is no need of addition of any liquid and mother can feed this directly to the baby. Furthermore, subcategories of baby foods include dried baby food, milk formula, prepared baby food and other baby food such as baby snacks and beverages. Cow milk-based formulas are gaining large adoption in emerging economies in the past few years. Increasing population base, rising disposable income level of individual and growing urbanization, are some of the major reasons, which are expected to be driving the baby food market in all across the globe.

Baby food is either a total or partial substitute for breast milk for infants or toddlers of under two years. It is a soft food, which can be easily consumed by infants and babies. To meet the nutritional requirements of the baby, baby foods are especially designed by the manufacturers. Generally, baby food is prepared with required amount of proteins and iron, so that it properly helps in the baby’s growth and initial body development. The baby food market is classified into various segments which include product, health benefits and basic ingredients.

Supermarkets, hypermarkets, small grocery retailers, and health & beauty retailers are the key distribution channels in the baby food industry. Supermarkets are the primarily preferred distribution channel among consumers, followed by health and beauty retailers. However, considering the scenario in few Asian developing countries such as India, small grocery retailers and health & beauty retailers hold significant share considering sales in the region. Small grocery retailers account for a comparatively smaller share in the baby food market but would witness rapid growth over the forecast period. Other distribution channels include discounters, non-grocery retailers, and non-store retailing.

Baby food is one of the fastest growing categories in baby care and overall FMCG industry of India. Baby food market is segmented mainly into infant milk formula, baby cereals, follow-up formula and other products like baby juice, baby soup, and prepared baby food products. All of these products have witnessed significant growth in the past few years.

Baby Food Market size in 2014 was valued at $50.7 billion and is expected to garner $72.7 billion by 2020, registering a CAGR of 6.4% during the forecast period 2015-2020. Traditionally, babies are fed with soft home cooked food, a practice that is still popular in underdeveloped and developing countries. However, growing urbanization and changing lifestyles have increased the demand for packaged baby foods in different societies and cultures. These foods are fed to babies between the ages of four to six months and two years. Growing awareness for nutrition, rise in organized retail marketing, urbanization paired with a significant increase in the count of working women population are key factors that boost the baby food industry growth. Concerns related to food safety, falling birth rates, and the practice of feeding home cooked food to babies are the key restraints in this market.

The global baby food market is segmented based on product type, distribution channel and geography. Based on product type, the market is segregated into dried baby food, milk formula, prepared baby food, and other baby food. Presently, milk formula occupies the largest market share followed by the product segment of prepared baby food. However, over the forecast period, product segment of prepared baby food would gain prominent adoption in the global market. Sales of milk formula baby food is highly concentrated in the APAC region. Alternatively, demand for prepared baby food is largely limited to developed regions. However, market for prepared baby food, in developing regions would pick pace over the forecast period, subsequently leading to the dynamic growth of the baby food market in the APAC region.

The global baby food market has been analyzed on the basis of four geographical regions, which include North America, Europe, Asia-Pacific and LAMEA. Asia-Pacific is leading the market in terms of adoption of new and innovative baby food products launched by various companies, followed by the European region. Asia Pacific is the largest market for milk formula and occupies more than half of the overall world baby food market share. Larger demand would be observed in the LAMEA region over the forecast period.

Prepared baby food is the second largest market globally and is expected to grow the fastest CAGR during the forecast period. Growing time constraints among parents are the key factors propelling the increased adoption of prepared baby food. Presently, the demand for prepared baby food is largely limited to developed countries, however, over the forecast period, a considerable adoption would be witnessed in developing countries. Presently, demand for dried baby foods is moderate and would gain a steady pace over the forecast period. Increasing consumption of dried food with nutritionally balanced content is a key factor driving the demand for dried baby food products market.

The global baby food market has experienced significant growth over the past few years, primarily due to rising population of working women, and their concern for good nutrition for their babies. Furthermore, manufacturing of baby food under strict health and safety standards has helped creating the awareness about the usefulness of packaged baby foods in providing the required nutrition for babies. This in turn has escalated the demand for baby food in the world market. Additionally, baby food is gaining popularity in the high income groups as a part of their status quo, especially in the emerging markets, which is expected to further drive the baby food market in emerging economies.

Currently, owing to increasing demand for nutrition from the natural sources, the organic baby food segment is growing at a significant pace and several large players are engaging themselves to cash in the untapped markets.

The demand for baby food in India is witnessing a continuous increase due to rising awareness among parents to adequately fulfil the nutritional requirements of their babies. Though the demand for baby food is comparatively a lot higher in developed countries as compared to developing nations, the market is witnessing increasing demand due to increasing purchasing power of the consumers and busy lifestyle of working women that restricts them to cook food for their babies at home.

Baby food is expected to grow at a constant 2017 value CAGR of 8% during the forecast period to reach INR69.8 billion in 2022. The increasing number of working women, growing nutrition concerns for the development of babies among young mothers and the convenience of baby food available throughout the country will support the growth of baby food in India.

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