Australian baby food boom set to falter

Baby food is booming, a new report from Euromonitor International shows. While baby food achieved 9% value growth in 2013, this was confined largely to the milk formula sector, which experienced a 12% value increase.

Interestingly, most of this demand has not come from Australian parents, but from parents in China, Euromonitor says. Recent food scares have prompted Chinese parents to source their milk formula from other countries with better food safety records, such as Australia.

According to Euromonitor, a ‘grey market’ trade is flourishing, in which Chinese nationals living in Australia purchase milk formula in bulk and mail it to China. This resulted in a significant surge in demand for milk formula in 2012, with the market growing 22% before easing slightly to 12% in 2013. This has also led to significant shortages of milk formula at retailers around the country, with some retailers introducing limits on how many units can be purchased in one transaction.

2012 was the Year of the Dragon, considered a particularly lucky year in which to be born. This led to a further spike in births in China, putting further strain on milk formula supplies in Australia.

Growth has been particularly strong in toddler milk formula, again largely due to demand from China, where children consume baby milk formula until an older age.

Nestlé Australia’s S-26 brand has overtaken Heinz’s brand. S-26 holds a 23% value share in the category, with Nutricia’s Karicare and Aptimil brands holding 16 and 11% respectively.

Euromonitor has suggested that these brands’ popularity may have more to do with their popularity in China and with Chinese nationals sending it home from Australia than their popularity in Australia.

The increased demand for organic baby milk formula has been positive for the Bellamy’s Organic brand, which attained a 3% share of the baby food category in 2013.

Euromonitor predicts that baby food in Australia is about to enter a period of far less vibrant growth than that experienced since 2007. The rise of the birth rate that has occurred since 2007 is set to subside, the boom produced by Chinese nationals mailing baby formula home will likely disappear and social trends are moving away from manufactured baby food, Euromonitor says.

More information about the Euromonitor report, Baby Food in Australia, is available from www.euromonitor.com.