Sunday, January 24, 2016

Infant Plurality (Part II)

Drivers and Inhibitors

Strict guidelines regarding the infant food market make it difficult for companies to operate in the Indian baby food market. Moreover, the ban on advertising baby food products in India makes it difficult for companies to penetrate into the domestic market, especially in rural areas, where awareness levels are low.
Despite regulatory concerns, though, the Indian processed baby food market is witnessing a sea change primarily driven by the growth of modern trade and economic prosperity of urban parents.
As a result, a variety of products and variants have started to appear on supermarket shelves in the last few years. Also, in the last few years, companies have added new product lines catering to the new found demand from aspiring Indian consumers who want the best-in-class products for their babies. This rise in demand is predominately driven by improving awareness, rising income levels, increase in working women population, growing modern trade, demand for convenience and shifts in consumer behaviour, making India one of the fastest growing baby food markets in the world.
Gone are the days when Indian parents had limited product availability for their babies. Today, supermarket shelves are being filled with a slew of product launches across baby food categories.
During the last two years, the infant formula and cereal category has seen the highest number of launches across all baby food categories. Targeted product development means manufacturers are making an effort to launch products that match the traditional Indian tastes. Several new products have also been launched in the bottled baby food, juices and baby snacks categories.

Several global brands such as Heinz and Gerber are now available in supermarkets and hypermarkets. Heinz has introduced 'Breakfast' and 'Dinners' (each representing meals for different times) in key retail stores across India. Similarly, Gerber (owned by Nestle) has made its presence felt in the bottled cereals and bottled juices categories. Some of the recent product launches in the Indian baby food market include:
An analysis of the recent product launches suggests some important trends in the packaged baby food market in India. Given the priority that parents accord to food quality and natural ingredients, it is no surprise that a majority of manufacturers are launching products with claims such as 'vegetarian', 'no artificial colour', 'no flavours', and 'no preservatives'. In terms of ingredients, honey and sugar top the chart of most prevalent ingredients. This indicates the Indian baby food market is in a developing stage with consumers still absorbing the idea of packaged food for babies and manufacturers launching tried and tested variants in India, unlike Western countries where the baby food has evolved from offering basic nutrients to organic and functional ingredients.
Competition in the Indian baby food market is expected to heat up with industry players and retailers stepping up their product launch activities by bringing in global portfolio for Indian parents. Datamonitor identifies a few trends that can potentially change the current dynamics in the Indian baby food market:
* Widening product portfolio: The product mix in the baby food category could see a radical change as global companies bring new offerings to the Indian market. Companies have already launched products in underexploited categories such as bottled baby food, snacks and juices, which were almost non-existent in the Indian market. Datamonitor expects such categories would see a further boost with the increase in new product development activities by existing and new players, thereby increasing the choice available to Indian consumers.
* Substituting/complementing traditional baby food: The Ministry of Women and Child Development suggested that choices for feeding infants and young children could be a good starting point for targeted product development offering a substitute or complementing an existing meal item. Companies have already started bringing in products which substitute or complement traditional home-made baby food products. Clearly, companies can launch products which can replicate the taste and flavour of other traditional home-made foods such as upma and poha, among others, to increase penetration in the Indian market.
* Increased demand from Dually Employed with Kids (DEWKS): India is witnessing a manifold increase in the number of nuclear families and families with working parents. As a working mother juggles between managing her professional life and fulfilling obligations as a mother, there is an increase in demand for convenient baby food products from such parents. This demand would provide future growth in the baby food products category with consumers lapping up the idea of keeping prepared and healthy baby food at home.
* Changing consumer perception: There is still some apprehension among Indian consumers about the quality of packaged food products, as they believe fresh food is healthier for the baby. The result of the survey conducted by Datamonitor further validates this trend. According to the survey, 80 percent of Indian respondents agree that health considerations significantly influence their choice of purchasing food products and drinks. However, this perception is set to change with the growing awareness among Indian consumers and increasing product availability on store shelves.
* Day care centres: With the everincreasing number of nuclear families and working parents, the need for specialised creches or daycare centres is on the rise. These centres do not only act as a pit-shop for the infant care, but could provide a key platform for manufacturers to increase awareness and reach out to the target audience directly.
The Indian baby food market is in growth mode and gradually transitioning into one of the fastest growing baby food markets in the world. However, most of the product demand remains concentrated in urban areas with the upper-middle class family segment. Even in terms of product innovations, the Indian baby food market is in the early phase in comparison to other countries. Hence, manufacturers need to focus on creating demand for their products through investments in product localisation to suit Indian consumer tastes, competitive pricing and expanding consumer reach by generating better consumer awareness. On a positive note, changing consumer behaviour, increasing income levels, need for convenience, development of modern trade and expanding product portfolio would drive future growth in the market. By 2015, Datamonitor predicts the Indian baby food market to increase at a rapid rate of more than 15 percent and double its size to cross the market value of Rs.3,500 crore.

Niraj Lalka is a senior consumer analyst at Datamonitor

Read: part III

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