Baby Food in Canada

PROSPECTS

Outside of milk formula, baby food sees continued conversion to organic

Prepared and other baby food remained more dynamic than milk formula in 2018, despite the low birth rate and low growth of the target population, which limited volume consumption. Still, the conversion to organic, as clearly seen in the rapidly changing product offerings available on the shelves of major grocery retailers, was a potent driver of value growth.

Milk formula remains stable

There were a number of factors leading to the relative stagnancy of milk formula in Canada in 2017 and 2018. First, over the review period there were no reports of significant changes in the breastfeeding rate in Canada, with the last reported rate of 89% in 2011/2012.

Other baby food sees the fastest growth, benefiting from the snacking trend

Other baby food (products not typically positioned as meals) experienced stronger growth than dried and prepared baby food over the last five years. This was supported by the rising snacking trend, which appeals to millennial parents who themselves increasingly skip regular meals and take more snack breaks in the search for more interesting experiences and variety.

COMPETITIVE LANDSCAPE

Milk formula remains highly consolidated

Mead Johnson Nutrition, Abbott Laboratories and Nestlé Canada remained the three dominant players in milk formula in 2018, accounting for most value share and seeing little other competition. Whilst Nestlé Canada appears to be placing increasing emphasis on products with added functionality and benefits such as iron and DHA, Abbott has gradually added non-GMO claims to the majority of its offerings in milk formula.

Kraft Heinz Canada and Nestlé Canada lead baby food, other than milk formula

The Heinz brand lost share in the five years prior to 2018, and received little boost from the merger with Kraft, although this brand still resonates with a sizeable market due to its low price positioning, wide retail distribution and close relationships with retailers and distributors. However, the company has been slow to respond to the shift in market demand.

Baby Gourmet and Love Child continue to flourish

As pioneers and trend-setters in organic baby food in pouches, Baby Gourmet and Love Child have enjoyed healthy growth; in fact, double-digit growth in many categories and years since they started back in 2012-2013. Both have been actively engaged in new product development, including Baby Gourmet’s launch of organic beverages for children and new puffed snacks in 2017.

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