The market for products for babies and children under five has long been a major business booster for the UK supermarkets, Co-ops and convenience store chains. When consumers were tightening their belts elsewhere, they still spent on their little ones. Baby & Kids is still a huge business in 2015, but here too, as with other grocery markets, there is no place for complacency.
According to Mintel’s March 2015 report on Babies & Children’s Personal Care Products, babies’ and children’s personal care, nappies and wipes declined in value by 3% in 2014, as the baby boom slowed with the number of live births recorded by the ONS down 4% in 2013. Lack of NPD and reduced ad spend also contributed to the decline. On top of this, with half the parents who buy nappies and wipes bulk doing it on special offer, low prices were driving category value down further.
On the plus side, banning various preservatives from ‘leave-on’ products for babies in 2015 will likely boost NPD as baby care brands look to reformulate. This should benefit sales, given that a quarter of parents feel ingredients in personal care products can be harmful to children and babies. Product claims have already begun to move away from generic botanical claims to more health-driven hypoallergenic and paraben-free claims to help alleviate concerns.
Mintel’s Senior Research Analyst Roshida Khanom remains optimistic: “As the baby boom shows signs of ending, it may be more relevant to focus on toddlers rather than newborns. Extending product ranges for older children and offering greater product segmentation by age could be a way to ensure growth. Greater transparency in ingredients also offers opportunities, as parents show evidence of becoming more ingredient-savvy.”
According to Mintel’s April 2015 Baby Food & Drink report, the UK baby food, drink and milk market was also hit by the decline in the birthrate, contributing to the 3% decline in volume sales over 2013-14. Meanwhile, rising prices have fuelled value growth ahead of volumes, translating into a 3% value growth over 2013-14, putting the market’s total value at £656 million in 2014.
Mintel expect a further 2% decline in the number of births over 2014-19. This poses a challenge for the category, in their words, as does the ongoing competition that manufactured baby food faces from homemade versions. Homemade baby food is preferred by most parents to manufactured, and half of all parents do not use manufactured baby foods at all.
On the positive side, with the average age of mothers now 30, a rise in real disposable income should facilitate premiumisation in the market. The percentage of new mums who have initiated breastfeeding has now stabilised, with less than half of babies breastfed after six to eight weeks. NPD is booming in the key area of baby snacks, backed by climbing ad spend. Meanwhile, the opportunity remains to increase the number of parents who buy baby food online, and respond to concerns over sugar and salt.