Baby Food in Canada

2021 DEVELOPMENTS

After panic-buying in the early stages of the pandemic, 2021 sees a normalisation of consumption patterns in baby food

After seeing retail volume and current value strongly increase in 2020, mainly due to COVID-19, baby food is expected to see a decline in 2021 as retail volume and current value sales return to pre-pandemic levels. After the virus hit the country at the beginning of 2020 and public health emergencies were declared in regions from March, many parents stockpiled baby food to ensure they had enough supplies to take them through the lockdown.

The move towards organic products continues and milk formula returns to dynamism

In 2021, baby food excluding milk formula is expected to continue to be significantly impacted by health trends already seen in foods for older children and adults, such as organic offerings. These include products from all-organic players such as Baby Gourmet and Love Child, as well as from major players including Kraft Heinz, which has made significant investments in its organic offerings, and Nestlé Canada, which has re-entered prepared baby food with all-organic products.

Organic players fare well, at the expense of the leaders

Nestlé Canada and Mead Johnson Nutrition are expected to remain the two largest players in baby food in 2021. Nestlé is expected to continue to lead dried baby food and standard milk formula, whilst Mead Johnson is expected to maintain its lead in overall milk formula thanks to its strong lead in special baby milk formula.

PROSPECTS AND OPPORTUNITIES

After a decline in 2021, stability set to return to baby food in 2022

After the expectation of a decline in 2021, baby food is expected to see positive retail volume and current value growth in 2022, as sales return nearly to pre-pandemic levels. In addition, an impact is expected from COVID-19 in the first half of the forecast period in terms of a lower birth rate, as population growth has ground to a halt due to a lack of immigration, which is typically a driver of the birth rate and population growth in Canada.

More organic entrants expected due to the potential in this segment

Due to the strong move amongst parents towards purchasing organic products for their babies, a new organic player in baby food, US brand Once Upon a Farm, made a forceful entry in the Canadian market, with a presence in major grocery retailers such as Metro, Loblaws and Sobeys toward the end of the review period. Having made a huge splash in the US, it is now expanding into Canada.

A direct-to-consumer approach and e-commerce are indispensable in the post-pandemic era

Milk formula brands have traditionally been present in outlets such as BabyCenter Canada that are visible to young parents, particularly mothers, and offer free beginners kits to engage them. During the pandemic, there have been initiatives to reach consumers in a more direct and convenient manner.