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
