Baby food tends to be a teaser category. On the one hand, potential exists to build lasting customer relationships by providing wholesome foods for a parent's pride and joy. On the other hand, it's a category that holds parents captive for only a few years. But the organic niche of the overall baby foods market shows the best recent growth and future potential, driven by increasing concerns about the quality and healthfulness of foods. And with some creative merchandising and community outreach, savvy retailers can optimize what has been a lackluster performer.
The baby food and formula market has remained relatively flat during the last five years, logging $3.7 billion in sales in 2001, according to both Mintel Intelligence and ACNielsen. Declining birth rates and population trends have impacted the market.
But the organic segment of the market has seen solid growth. Sales rose 8 percent in the first seven months of 2002 to $7.2 million, according to SPINs, the San Francisco-based trends tracker. And at Earth's Best, category leader for organic baby foods, sales in the naturals channel have grown 10 percent so far this year, says Amy Wheelock, brand manager for The Hain Celestial Group in Melville, N.Y.
"It seems to me that there has been a baby explosion around here the last few years," says Debra Stark, owner of Debra's Natural Gourmet in Concord, Mass.
Though demographic data has yet to produce conclusive evidence of a baby boom, the far-reaching trend toward eating healthier affects this category. Even parents who don't eat well want better for their children, and concerns about pesticide residue and GMO contamination are driving demand for organic baby foods.
Parents realize their babies are born with clean immune systems, says Jay Highman, president of Nature's One Inc., in Columbus, Ohio. Conventional offerings, with processed ingredients, fillers and preservatives worry them. "What they don't want to do is say, 'Here, welcome to the world, have your daily dose of chemicals.'"
The ballooning obesity crisis is also directing many American parents toward more healthy choices. Gerber Products Co., which manufactures an organic line called Tender Harvest, has invested $1 million in a print advertising campaign to promote better eating choices for babies. While the root cause of obesity comes down to calorie intake versus calorie output, not organic versus conventional, organic options represent a healthy choice for worried parents.
But many retailers are hesitant to invest the time and energy necessary to capture the potential of the organic baby foods market. Return to Eden, a four-store vegetarian chain in Atlanta, carries 50 SKUs of baby foods, and the category does "pretty good," says Jeanette Zeis, the store's grocery buyer. But the store has never reached out to mothers and families with any targeted marketing efforts.
"A lot of retailers say they can't make money on baby food," Highman says, "but it's kind of a self-fulfilling prophecy. You've got to get out there and find a market for your section. You've got to work it."
Cannondale Associates, a marketing and sales management consulting group based in Evanston, Ill., in partnership with Gerber, recently completed a retailing study on how to boost baby product sales. The Baby Builders study recommends merchandising food, formula, diapers and accessories together, with diapers and baby food at opposite ends of the set. In between, retailers should cross-merchandise wipes, feeding accessories and infant health care items, which are complementary and stimulate impulse purchases.
A mom who buys baby formula tends to spend $25 more per visit than the average head of household, Highman says. "A savvy merchandiser could cross-merchandise a great section."
Stark's store carries all the extras. "They seem to be consistent good sellers," she says. Though the store doesn't merchandise all the baby products together, she understands putting jarred foods near a bum-balm product or hypoallergenic wipes may spur some sales. "More people come in for baby stuff than come in for food. Most people who shop in natural products stores seem to make their own [baby] food. But they still buy other stuff."
Beyond merchandising, proactive retailers can create community relationships that help drive sales of baby foods and products. For example, Stark brought in an expert on baby massage to talk to her customers. Supermarkets run baby clubs, more targeted versions of the loyalty card program, which provide incentives for parents to do all their shopping at the store where they buy baby foods.
Highman recommends contacting midwifery organizations or naturopaths who consult with pregnant mothers. "All those people are out there actively recommending natural and organic foods."
So if your baby foods sales have been stagnant, it makes sense to invest the time and effort to make lemonade out of lemons. "It's certainly a category that you couldn't do without," Stark says, "because the ones that buy it come in religiously."
Natural Foods Merchandiser volume XXIII/number 10/p. 54, 60
Natural Foods Merchandiser volume XXIII/number 10/p. 60