Baby food, dominated by milk formula, was already experiencing a consistent fall in demand prior to the emergence of the pandemic in Taiwan due to a declining birth rate. This situation has been exacerbated since the emergence of the pandemic and rising cases in the first half of 2021, resulting in the government raising the alert level to 3 and leading to a lockdown involving school closures and remote working measures in place; contrary to predictions, when it was believed that the birth rate may increase with many citizens remaining at home due to various restrictions in place, the birth rate has fallen to its lowest ever level with just 164,000 babies born in 2020, a trend which is likely to continue with younger generations postponing marriage due to a general feeling of pessimism regarding their future, including financial concerns.
Outside of milk formula, dried baby food is the most popular format, but was already experiencing declining demand prior to the pandemic; the home seclusion trend as a result of the pandemic only exacerbated this trend as consumers took to preparing their own baby food, resulting in a predicted double-digit volume decline for 2021. Dried baby food has been losing favour with local consumers due to health concerns; traditionally it was appreciated as an affordable alternative food for babies over nine months due to its much lower price in comparison compared to milk formula, while some parents would add dried baby food to milk formula to satisfy their growing child’s appetite.
While Nestlé Taiwan Ltd retains its convincing leadership of baby food in Taiwan due to its strength in the largest category of milk formula where it offers brands such as S-26 and Nan, it is likely to continue to decline in value sales terms over 2021 in line with a further drop in demand for the product. Nevertheless, Nan also leads the more dynamic niche of special baby milk formula, where it is predicted to gain further notable value share and sales during the year.
Overall demand for baby food, driven by milk formula, is predicted to continue to decline into the first half of the forecast period, in line with a likely drop or stagnation in the country’s birth rate due to lingering price sensitivity and a growing preference for breastfeeding in the initial months after a baby’s birth. Greater stabilisation however, is predicted towards the end of the forecast period.
The forecast period is likely to see the further entry of prepared baby food and other baby food brands in line with demand for greater convenience. Prepared baby food in particular, has been gaining share from dried baby food due to its more positive perception, as not only does it offer convenience for busy parents, but baby congee or fruit puree products are deemed to be of similar quality to parents’ homemade solid baby food.
Strict policies in Taiwan for baby food, including milk formula and prepared baby food, have created strong barriers for players to promote their products to parents. In order to claim that a product has an “organic” positioning, players must undergo a complicated application process and frequent testing, which is a particularly difficult procedure for imported brands.
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This report originates from Passport, our Baby Food research and analysis database.
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