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MAPS ALTERNATIVE HEALTHCARE MARCH 2003

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TABLE OF CONTENTS

Executive Summary 7
 
1. Introduction 8
 
OVERVIEW 8
 
DEFINITION 8
 
Baby Meals 8
 
Baby Milks 8
 
Standard Infant Formulas 9
 
Follow-On Milks 9
 
Soya Formulas 9
 
Ready-to-Drink Milks 9
 
Baby Drinks 9
 
Baby Finger Foods and Rusks 9
 
2. Strategic Overview 10
 
MARKET BACKGROUND 10
 
Demographic and Social Factors 10
 
Table 1: Total Births and Birth Rate in the UK
(000 and number), 1981-2002 10
 
Table 2: Number of Children Aged 0-2 Years in the UK (000), 2001-2003 11
 
Table 3: General and Total Fertility Rates in England and Wales
(number), 1992-2002 11
 
Table 4: Average Age of Mother† at Birth of First Child
in England and Wales (years), 1971-2002 12
 
Table 5: Employment Status of Women by Age
of Youngest Dependent Child (%), Spring 2003 13
 
MARKET DYNAMICS AND SEGMENTATION 13
 
Table 6: The Total UK Baby Food and Drink Market by Sector
by Value (£m at rsp and index 1999=100), 1999-2003 14
 
Figure 1: The Total UK Baby Food and Drink Market by Sector
by Value (£m at rsp), 1999-2003 15
 
Table 7: The Total UK Baby Food and Drink Market
by Sector by Market Share (%), 1999-2003 16
 
The Growth of the Organic Sector 16
 
DISTRIBUTION 17
 
Table 8: The UK Baby Food and Drink Market by Market Share by Distribution Channel (%), 1999 and 2003 17
 
COMPETITIVE STRUCTURE 17
 
H.J. Heinz Company Ltd 18
 
Nutricia Baby Care Ltd 18
 
SMA Nutrition 18
 
HiPP Organic 18
 
Organix Brands 18
 
ADVERTISING 19
 
Above-the-Line 19
 
Table 9: Main Media Advertising Expenditure on Baby Food and Drink (£000), Years Ending September 2002 and 2003 20
 
Below-the-Line 20
 
Sampling 20
 
THE CONSUMER 22
 
Table 10: Parents, Prospective Parents, and Purchasers
of Baby Products (% of respondents), October 2003 22
 
Table 11: Demographic Profiles of Parents of Babies
and Children Under 16 (% of respondents), October 2003 23
 
Table 12: Demographic Profiles of Prospective Parents
and Others who Purchase for Babies and Small Children
(% of respondents), October 2003 25
 
MARKET FORECASTS 26
 
3. Baby Meals 27
 
BACKGROUND 27
 
Table 13: Age of Baby at Introduction of Solid Foods in the UK (%), 1995 and 2000 27
 
MARKET SIZE AND SEGMENTATION 28
 
Table 14: The UK Baby Meals Market by Sector by Value
(£m at rsp and index 1999=100), 1999-2003 28
 
Figure 2: The UK Baby Meals Market by Sector by Value
(£m at rsp), 1999-2003 29
 
Table 15: The UK Wet Baby Meals Market by Sector by Value and Market Share (£m at rsp and %), 2000 and 2003 30
 
CONSUMER TRENDS 30
 
Table 16: Frequency of Usage of Baby
or Junior Foods, Cereals and Rusks
(% of housewives with children under 2 years), 2003 30
 
Table 17: Baby Food Packaging Type Used Most
(% of housewives with children under 2 years), 2003 31
 
RECENT DEVELOPMENTS 31
 
Semicarbazide 31
 
New Product Development 31
 
MARKETING AND ADVERTISING 32
 
4. Baby Milks 33
 
BACKGROUND 33
 
MARKET SIZE AND SEGMENTATION 33
 
Table 18: The UK Baby Milks Market by Value
(£m at rsp and index 1999=100), 1999-2003 34
 
Standard Infant Formulas 34
 
Follow-On Milks 34
 
Soya Formulas 35
 
Ready-To-Drink Milks 35
 
Table 19: The UK Baby Milks Market by Sector by Value
and Market Share (£m at rsp and %), 2000 and 2003 35
 
Figure 3: The UK Baby Milks Market by Sector by Value
and Market Share (£m at rsp), 2000 and 2003 36
 
CONSUMER TRENDS 36
 
Table 20: Prevalence of Breast Feeding at Ages Up To 9 Months in the UK (%), 1995 and 2000 37
 
Table 21: Frequency of Usage of Baby Milks
(% of housewives with children under 2 years), 2003 37
 
Table 22: Attitudes Towards Baby Products and Related Issues
(% of respondents), 2003 38
 
RECENT DEVELOPMENTS 38
 
MARKETING AND ADVERTISING 39
 
5. Baby Drinks 40
 
BACKGROUND 40
 
MARKET SIZE AND SEGMENTATION 40
 
Table 23: The UK Baby Drinks Market by Value
(£m at rsp and index 1999=100), 1999-2003 40
 
Table 24: The UK Baby Drinks Market by Sector by Value
and Market Share (£m at rsp and %), 2000 and 2003 41
 
Figure 4: The UK Baby Drinks Market by Sector by Value
and Market Share (£m at rsp and %), 2000 and 2003 42
 
NEW PRODUCT DEVELOPMENT 42
 
6. Baby Finger Foods 43
 
BACKGROUND 43
 
MARKET SIZE AND SEGMENTATION 43
 
Table 25: The UK Baby Finger Foods Market by Value
(£m at rsp and index 1999=100), 1999-2003 43
 
Table 26: The UK Baby Finger Foods Market by Sector by Value
and Market Share (£m at rsp and %), 2000 and 2003 44
 
Figure 5: The UK Baby Finger Foods Market by Sector by Value
and Market Share (£m at rsp), 2000 and 2003 45
 
NEW PRODUCT DEVELOPMENT 45
 
CONSUMER TRENDS 46
 
MARKETING AND ADVERTISING 46
 
7. An International Perspective 47
 
THE EU 47
 
THE US 47
 
8. PEST Analysis 48
 
POLITICAL FACTORS 48
 
ECONOMIC FACTORS 48
 
SOCIAL FACTORS 49
 
TECHNOLOGICAL FACTORS 49
 
9. Consumer Dynamics 50
 
SUMMARY OF RESEARCH 50
 
Table 27: Summary of Attitudes Towards Baby Milk
and Baby Food (% of respondents), 2003 50
 
Table 28: Comparison of Attitudes Towards Baby Milk
and Baby Food (% of respondents), 2001 and 2003 52
 
BABY MILKS 53
 
Manufactured Baby Milks Should Be As Near As Possible To
Natural Breast Milk (S1) 53
 
Babies Should Be Breast Fed For At Least 6 Months If Possible (S2) 53
 
Table 29: Attitudes Towards Breast Feeding,
and the Formulation of Manufactured Baby Milks
(% of respondents), 2003 54
 
INFLUENCES 55
 
Parents Are Influenced Most By Midwives And/Or Health
Visitors When Deciding Which Kinds Of Baby Milk To Buy (S3) 55
 
Parents Are Influenced Most By Friends And/Or Family When
Deciding Which Kinds Of Baby Milk To Buy (S4) 56
 
Table 30: Influences on Parents' Choice of Baby Milk
(% of respondents), 2003 56
 
BABY MEALS 58
 
It Is Better For Parents To Prepare Their Own Food For a Baby Rather Than Buying Ready-Made Meals From A Supermarket (S5) 58
 
Prepared Baby Meals Make Life Much Easier For Busy Parents (S6) 58
 
Table 31: Home-Made Versus Manufactured Baby Meals
(% of respondents), 2003 59
 
TASTE 60
 
Babies Should Get Used To Eating Adult Foods As Early
As Possible (S7) 60
 
Many Baby Foods Taste Too Bland (S8) 61
 
Table 32: The Taste of Baby Foods (% of respondents), 2003 61
 
Baby Food Manufacturers and Organic Baby Foods 62
 
I Would Rather Buy Baby Food From A Manufacturer That I Had Heard Of Rather Than From An Unknown Company (S9) 62
 
Organic Food Is The Best Type Of Food For Babies (S10) 63
 
Table 33: Attitudes Towards Baby Food Manufacturers,
and Organic Baby Foods (% of respondents), 2003 63
 
JARS 64
 
I Would Prefer Not To Use Baby Food in Jars (S11) 64
 
Wet Baby Meals in Jars Tend To Be Better Quality Than Dried
Rehydrated Meals (S12) 64
 
Table 34: Attitudes Towards Baby Food in Jars
(% of respondents), 2003 65
 
BABY FINGER FOODS 67
 
Baby Finger Foods Such As Rusks And Baby Biscuits Are More Nutritious Than Adult Biscuits And Snacks (S13) 67
 
It Is Much Better To Give Babies Savoury Finger Foods Than Sweet Ones (S14) 67
 
Baby Finger Foods Such As Rusks And Baby Biscuits Contain Too Much Sugar (S15) 67
 
Table 35: Attitudes Towards Baby Finger Foods
(% of respondents), 2003 68
 
10. Company Profiles 70
 
H.J. HEINZ company ltd 70
 
Corporate Strategy 70
 
Profitability 70
 
Table 36: Financial Results for H.J. Heinz Company Ltd
(£000), Years Ending 29th April 2000, 28th April 2001
and 27th April 2002 70
 
Recent and Future Developments 71
 
HIPP ORGANIC 71
 
Corporate Strategy 71
 
Profitability 72
 
Recent and Future Developments 72
 
NUTRICIA BABY CARE LTD 72
 
Corporate Strategy 72
 
Cow & Gate 72
 
Milupa 73
 
Profitability 73
 
Table 37: Financial Results For Nutricia Baby Care Ltd (£000),
Years Ending 31st December 2000-2002 73
 
Recent and Future Developments 73
 
ORGANIX BRANDS 74
 
Corporate Strategy 74
 
Profitability 74
 
Recent and Future Developments 74
 
SMA NUTRITION 75
 
Corporate Strategy 75
 
Profitability 75
 
Recent and Future Developments 75
 
11. The Future 76
 
FACTORS AFFECTING THE MARKET 76
 
Demographic Trends 76
 
Table 38: Forecast Number of Children Aged 0-2 Years in the UK (000), 2004-2008 76
 
Product Development 76
 
Organic Food 77
 
Semicarbazide 77
 
Other Factors 77
 
MARKET FORECASTS 77
 
Table 39: The Forecast UK Baby Food and Drink Market
by Sector by Value (£m at rsp and index 2004=100), 2004-2008 78
 
Figure 6: The Forecast UK Baby Food and Drink Market
by Sector by Value (£m at rsp), 2004-2008 79
 
12. Further Sources 80
 
Associations 80
 
Publications 80
 
General Sources 80
 
Government Sources 81
 
Other Sources 81
 
Bonnier Information Sources 82

Executive Summary

Despite the falling birth rate, the UK market for baby milks and baby foods has maintained steady growth over the past 5 years (1999 to 2003). A number of factors are responsible for this, including socio-demographic trends, such as the trend for older motherhood and the high proportion of mothers of young children in full- or part-time employment. Innovation by manufacturers has also played an important part in the development of the market, with new products emphasising convenience and health advantages. The market has also benefited from the growth of organic baby foods, which command a price premium.
 
Convenience has been one of the main drivers of the market for prepared baby meals, prompted particularly by the growing number of working mothers. To counter this, there has been a trend — encouraged by government advice — towards introducing solid foods at a later age. Baby food in jars represent by far the largest segment of the baby meals sector, and have increased their share during the past 5 years. However, the potential food safety issues connected to food in glass jars — which received widespread coverage in October 2003 — may affect this balance, at least in the short term.
 
The overall market for baby milk has grown relatively slowly over the past 5 years. The development of added-value products, such as follow-on milks (FOMs) and ready-to-drink (RTD) formats, has been balanced by continuing price promotions within the sector.
 
The market for baby drinks is small, and has been declining since the
mid-1990s, mainly due to controversy over sugar levels, and also because of the widespread availability of alternatives to baby drinks
 
The baby finger foods sector, although small, is the most dynamic within the baby foods market. Rusks used to dominate the sector, but a wide range of both sweet and savoury products is now available. The rise of the sector mirrors the growing importance of snacking within the adult market. It has also been helped by the fact that parents are becoming more
health-conscious on behalf of their babies; they are aware of the implications of feeding them adult 'junk food' and would rather give them
specially-formulated finger foods.
 
According to Key Note's exclusive consumer research, parents are now showing greater acceptance of prepared baby meals than they were in 2001. The coverage of baby food jars seems to have had a relatively small effect on parents' views, with only a slight drop in the number that think that the quality of meals in jars is higher than that of dry baby food. There has been a slight increase in the proportion of parents that think manufactured baby milks should be as near as possible to natural breast milk — and no change in the percentage that assert that 'organic is best' for babies.

Text © 2003 MAPS

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