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Baby food market in Australia to grow at 5.4% till 2023

Australia Baby Food Market is in the growing stage and was valued at USD 176.2 million in 2018. It is expected to grow at the CAGR of 5.4% during the forecasted period of 2018-2023 because of increasing women participation in the labor force and rising demand for organic food products.

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Definition / Scope

Baby food is any soft, easily consumed pureed or minced food like cereals, vegetables, fruits, or meat, other than breastmilk that is made especially for infants (4-24 months).[1] [2] It is available in diverse varieties and flavors which are purchased ready-made from producers. The baby food market is divided into the following segments:

Baby food market segment.png

Market Overview

Australian baby food market is in the growth stage. Its market value has been increased from USD 160.2 million in 2015 to USD 176.2 million in 2018. It is increasing at the CAGR of 5.4% from 2018-2023[3] The domestic sale is expected to reach USD 1078.52 million by 2023. [4]

Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

  • Lactose intolerance in babies

The Food Intolerance Institute of Australia has stated that almost 67-75% of Australians are affected with dairy intolerance[5] and the overall incidence of lactose intolerance is about 10%.[6] It has been raised among women from 3.8% to 6.2% within 4 years.[7] It has been estimated that 1 in every 10 young children has a reaction to the cow's milk.[8] This health condition can create a risk for the growth of the dairy baby food market.

  • Short shelf life of baby food

The shelf life of the baby food depends upon the packaging materials. Its shelf-life ranges from 1 to 2 years[9], which is the risk for the growth of its market.

  • Practice of feeding home cooked food

A study conducted among the Australians has shown that almost 78% of them eat a home-cooked meal around 5-6 nights a week.[10] It may risk for the demand of packed baby food too.

Top Market Opportunities

  • Busy lifestyle of parents

In Australia, almost 60% of both parents were employed in 2018 and worked some hours between 7 AM and 7 PM.[11] As a result, it is difficult to separate the time for the caring and arrangement of food for their children. They prefer to buy packed food for their babies. It is a wonderful opportunity for the development of packed baby food market.

  • Rising health consciousness

At present, most of the people are getting aware of nutrition and their health status. Along with this, increasing focus on the importance of proper nutrition for the growth and development of children is developing a fruitful environment for the growth of the baby food market.

  • Internet Retailing

It is one of the preferred channels for buying food products in the present context to save time, money and effort. Major online players are Catch.com, Chemistwarehouse.com, and Amazon.[12]

  • Global urbanization

Urbanization is creating a wonderful opportunity for employment activities. Because, most of the women, almost 60% of parents are employed in Australia. As a result, they have to rely on the prepared food for babies, which in turn bring the growth in the baby food market.

Market Drivers

  • Women labor force participation

At present, women are taking part in the labor force. It has increased to almost 60.5% in 2018[13] from 58.6% in 2014[14] Because of this, it has been quite difficult to continue breastfeeding which is influencing baby food market.

  • Strong demand for nutrient added and organic products

Almost 40% of consumers are increasing their purchase of organic products and more than one in every ten Australian were highly committed towards organic purchasing.[15] It will further create the market for organic baby food too.

  • The wide and expanding product range

Packaged baby food is available in a variety of flavors, consistency and packaging materials. It can be either apple, pear, or strawberry flavored. It can be custard, puree or in solid form packed in pouch, jar, and cans. This diverse nature of products is widening the scope of its market.

Market Restraints

  • Concerns related to food safety

Food safety is quite crucial during the early month of a baby's life for their better health and proper growth and development. At this stage, they are more at the risk of food poisoning due to immaturity in the immune system. This concern threats among the mothers for the use of food prepared outside the home.

  • Falling birth rate

In the context of Australia, the birth rate is in a declining trend. It has been decreased from 12.47 in 2009 to 12.1 in 2017. It can restrain the growth of the baby food market.

  • Exclusive Breastfeeding initiative

Government, as well as other health-related organizations such as World Health Organization, have led the campaign to promote the exclusive breastfeeding up to 6 months with no use of other food materials as breast milk is the best source of nutrition for infants. Because of this, the growth of the market for baby food among the age group below 6 months can be affected.

Industry Challenges

  • Huge Fragmented Market: The baby food market is segmented into multiple divisions on the basis of the food category, food consistency, packaging materials and way of preparation. It can be a challenge for the market players to manage it out.
  • Multiple taste and preferences towards flavors: As the flavor preferences vary in accordance with the babies, the food products are needed to be produced in multiple flavors, which can be challenging.

Technology Trends

New technologies in the food market have created a favorable environment to create good quality products with additional nutritional benefits. Some of the technologies used in the baby food market are as follows:

  • Anhydro Drying Technology: It is used to control the characteristics of the powdered food in terms of moistures, odors, and flavors. It optimizes energy consumption and ensures food safety.[16]
  • Hydrodynamic Cavitation process: It uses a rotor to generate and release the bubbles in the liquid to reduce viscosity and enhances spray drying efficiency.[17]
  • UV rays Disinfecting Infant Bottles: It kills any unwanted germs in the baby formula or milk.
  • Sense infant collection: It enables the ideal temperature for the food without the use of thermometer with the capability of heating or cooling the meal.[18]
  • Soother-like Baby Feeders: It enables the infants to feed themselves through the use of motor skills and eye coordination in the process of feeding. It is easily cleanable and washable.[19]

Pricing Trends

The price of baby food varies in accordance with the food category and brand name. Average price per unit in Australia for baby food market is USD 11.19 in 2019.[20] The price of a single item is summarized as below:

Price od baby food aus.png

Regulatory Trends

The regulations for the organization and management of the baby food market are as follows:

  • Manufacturers and Importers Agreement:

It is the code of conduct between manufacturers and importers of infant formula in Australia with a view to ensuring the supply of safe and adequate nutrition for the infants.[21]

  • Food Standards Australia New Zealand Act 1991

It is a policy guideline applied to the composition, labeling, advertising, and promotion of infant formula products.[22]

  • Food Act 2006

It is the legislation in order to ensure the safety and suitability of food, which is applied to all food businesses. It has been developed to prevent misleading conduct in relation to the sale of food products.[23]

  • Food Regulation 2016

It is the regulations related to the licensing of food businesses and display of license details by mobile premises.

Market Size and Forecast

The market size of Australia Baby food market was valued at USD 176.2 million in 2018 and is in the growth stage. It was increased from USD 160.2 million in 2014.[24] It is expected at grow at the CAGR 5.4% from 2018-2023.[25] because of the rising demand for organic food and increasing women participation in the labor force.

As per the market growth by the type of baby food is concerned, the growth rate of the milk formula is the highest among other categories which were 34% in 2018 and will reach 37.2% by 2023 as it is the prime constituent of the mother's milk.[26]

Australia baby food market.png

Market Outlook

Globally, the baby food market is expected to grow at the CAGR of 6.4% during the time period of 2015-2020 and will reach USD 72.7 billion by 2020.[27] In the context of Australia, this market is forecasted to grow at eh CAGR of the 5.4% during the time period of 2018-2025 and will reach USD 1078.25 million by 2025.[28]

Distribution Chain Analysis

By channel of distribution, supermarket, health and beauty specialist retailers, internet retailing, discounters, grocery specialist, convenience stores and forecourt retailers are involved. Among these, supermarket and health are more preferred to buy baby food in Australia with 76.5% market share.[29]

Baby food market dis.png

Competitive Landscape

There are almost 46 business companies in the baby food market in the context of Australia. Some of the major companies are Nestle, Heinz, Danone, etc. On the basis of the food category, It is segmented into dry, wet and milk product. Here, milk formula holds the largest market growth i.e. 34% in 2018.

Competitive Factors

In Australian baby food market, competition is concentrated by international players with more than half of the market share.[30] They are competing for pricing, marketing, innovation, distribution channel, and diversification in a portfolio.

Key Market Players

International Market Players

  • Nestle SA: It is the World's largest food businesses in 86 countries and in Australia, it has the second largest export market. It develops milk-based food for infants.[31]
  • Danone Group: It is also the leading global food and beverage company producing essential dairy and plant-based products and early life nutrition and medical nutrition.
  • Kraft Heinz: It provides a variety of baby foods in diverse flavors like sweet potato, spinach, apple, banana, etc. for infants and toddlers. It was rated four stars for overall satisfaction.[32]
  • PZ Cussons: It is a multinational business providing the services in the category of Food & Nutrition, Personal Care, Beauty, and Home Care across Australia and New Zealand.[33]
  • Rafferty's Garden: It is a global baby brand providing a range of food products like custards, purees, snakes, etc in both sweet and savory flavors. Its products are available at local supermarkets, chemists, baby stores and retailers, etc. Its products were rated four stars for overall satisfaction.[34]

Domestic and Regional market players

  • Bellamy's Australia Ltd: It produces a range of organic food products such as cereals, pouches for infants and children. Along with this, it retails pasta and pinkies bars.[35]
  • A2 milk Co.: It is a public listed company that produces a2 milk brands and other milk and related infant formulas.[36]
  • Bubs Australia Ltd.: It is the largest producer of the goat milk products in Australia and outside the country such as China, South East Asia, etc.[37]

Strategic Conclusion

Baby food market in Australia is in the growth stage and is surrounded by multiple opportunities in terms of increasing demand for organic foods and raising the participation of women in the labor workforce. However, food safety-related issue of packed food and declining birth rate might restrain the growth.

References

  1. https://en.wikipedia.org/wiki/Baby_food
  2. https://www.definitions.net/definition/baby+food
  3. https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/consumer-goods-services/baby-food-manufacturing.html
  4. https://www.prnewswire.com/news-releases/australia-baby-food-market-is-expected-to-reach-aud-1-540-million-in-terms-of-revenues-by-the-end-of-the-year-2023-ken-research-300818350.html
  5. https://www.canstarblue.com.au/groceries/lactose-intolerance-on-the-rise-in-australia/
  6. https://www.nestle.com.au/nhw/nutritionfactsheets/lactoseintolerance
  7. https://www.comparethemarket.com.au/blog/health/lactose-intolerance-on-the-rise/
  8. https://www.pregnancybirthbaby.org.au/milk-intolerance-in-babies-and-children
  9. https://www.earthsbest.com/resource/baby-food-jars-pouches-or-both/
  10. https://www.aihw.gov.au/reports/food-nutrition/australia-s-food-and-nutrition-2012-in-brief/contents/in-brief
  11. http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features50Sep+2009
  12. https://www.prnewswire.com/news-releases/australia-baby-food-market-is-expected-to-reach-aud-1-540-million-in-terms-of-revenues-by-the-end-of-the-year-2023-ken-research-300818350.html
  13. https://www.prnewswire.com/news-releases/australia-baby-food-market-is-expected-to-reach-aud-1-540-million-in-terms-of-revenues-by-the-end-of-the-year-2023-ken-research-300818350.html
  14. https://www.kenresearch.com/blog/2019/03/australia-baby-food-market-outlook-to-2023-ken-research/
  15. http://www.ausfoodnews.com.au/2018/05/14/australian-organic-market-report-2018-excites-new-investment.html
  16. https://www.newfoodmagazine.com/news/16641/leading-technology-for-the-production-of-infant-formulas-and-dairy-powders/
  17. https://www.newfoodmagazine.com/news/16641/leading-technology-for-the-production-of-infant-formulas-and-dairy-powders/
  18. https://www.trendhunter.com/trends/sense-infant-collection
  19. https://www.trendhunter.com/trends/food-feeder
  20. https://www.statista.com/outlook/40120000/107/baby-food/australia
  21. http://www.health.gov.au/internet/main/publishing.nsf/Content/health-pubhlth-strateg-foodpolicy-apmaif.htm
  22. https://foodregulation.gov.au/.../Forum-Policy
  23. https://www.health.qld.gov.au/public-health/industry-environment/food-safety/regulation/act-standards
  24. https://www.statista.com/statistics/538208/forecasted-market-value-of-the-baby-food-industry-australia/
  25. https://www.kenresearch.com/blog/2019/03/australia-baby-food-market-outlook-to-2023-ken-research/
  26. https://www.kenresearch.com/blog/2019/03/australia-baby-food-market-outlook-to-2023-ken-research/
  27. https://www.alliedmarketresearch.com/baby-food-market
  28. https://www.prnewswire.com/news-releases/australia-baby-food-market-is-expected-to-reach-aud-1-540-million-in-terms-of-revenues-by-the-end-of-the-year-2023-ken-research-300818350.html
  29. https://www.kenresearch.com/blog/2019/03/australia-baby-food-market-outlook-to-2023-ken-research/
  30. https://www.kenresearch.com/blog/2019/03/australia-baby-food-market-outlook-to-2023-ken-research/
  31. https://www.nestle.com.au/aboutus/history
  32. https://www.canstarblue.com.au/family-gifts/baby-food/
  33. https://www.pzcussons.com.au/about-us
  34. https://www.canstarblue.com.au/family-gifts/baby-food/
  35. https://www.canstarblue.com.au/family-gifts/baby-food/
  36. https://en.wikipedia.org/wiki/The_a2_Milk_Company
  37. https://investor.bubsaustralia.com/about/

Appendix

  • WHO= World Health Organization
  • USD= United States Dollars


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