Global Infant Formula Market: Growing Demand for Organic Baby Food & Increasing E-commerce Sales Key Trends

Global infant formula market revenues will continue to witness a steady increase in the near future, with rapid urbanisation and growth of a burgeoning middle class in developing regions fuelling demand. Global market revenues are expected to reach nearly $27 bn in 2017, up from $22.5 bn in 2015. Growing demand for organic baby food and emergence of online stores as a prominent distribution channel are the key trends shaping up the global market.

Asia Pacific excluding Japan (APEJ) will remain the largest market for infant formula, accounting for nearly 46% of global revenue share. China will continue to remain the largest market globally, accounting for nearly 90% revenue share of APEJ market and approximately 40% share of the global market.

According to FMI, demand for infant formula around the world is being influenced by the all-pervasive health and wellness trend. From the growing use of stevia as a natural sweetener to incorporation of natural food colours, consumer focus on 'organic' and 'clean label' has prompted manufacturers to scour for natural ingredients. This trend is also visible in the infant formula landscape, as revenues of organic baby food are witnessing a steady increase. This trend is more prominent in the US, Canada, and Western European countries.

Infant formula buying decisions are being heavily influenced by television and online advertising. Considering the rising awareness among consumers, leading baby food manufacturers are focusing on educating their consumers on the benefits of their products. Use of social media channels, such as Facebook and Twitter for brand positioning and consumer outreach is gaining traction among the leading companies.

While pharmacy stores remain the preferred buying channel, online sales are also gaining adoption. Online store revenues are expected to grow by 9.7% in 2017 over 2016 and reach nearly $690 mn in revenues. Supermarkets and specialty outlets remain the other key buying channels in the global infant formula market.

Leading players in the infant formula market, including Nestle, Danone, Abbott Nutrition, Heinz, and Mead Johnson will need to focus on broadening their product offerings to include more organic baby food products. Also, having a strong presence in the m-commerce segment can prove to be an effective strategy. Same-day delivery and discounts have proven to be an effective strategy for price-conscious consumers, especially in APEJ, and baby food brands can focus on this aspect to consolidate their position in this robustly growing market.