Organic Baby Food Market Size, Share & COVID-19 Impact Analysis, By Type (Wet Food, Infant Milk Formula, and Dry Food), Distribution Channel (Supermarkets/Hypermarkets, Specialty Stores, Online Sales Channels, and Others), and Regional Forecast, 2021-2028

The global organic baby food market size was USD 5.55 billion in 2020. The market is projected to grow from USD 6.05 billion in 2021 to USD 12.22 billion in 2028 growing at a CAGR of 10.58% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of -7.46% in 2020 as compared to the average year-on-year growth during 2017-2019. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

This market is witnessing progressive growth due to the rising demand for organic baby food products such as milk formulas and cereals. There is an increase in the variety of organic food products available at mainstream supermarkets. Moreover, many food manufacturers are acquiring other small food businesses and promoting their lines of products. In addition, there is rapid evolution of the baby food industry and novel preparations. It is expected to increase the demand for these items in the coming years.

Worldwide Demand & Supply Imbalance amid COVID-19 to Hinder Market Growth

The baby food industry has experienced a sudden disruption amidst the outbreak of the COVID-19 pandemic due to significant shift in demand dynamics. Lockdowns worldwide have led to the shutdown of manufacturing industries in the 2^nd quarter of FY 2020, which significantly reduced the demand for processed food items, including baby food products.

According to World Health Organization (WHO), disruptions were observed in health services between mid-2020 in almost 90% of the countries. Moreover, in more than half of the nations, there were disruptions in antenatal care, management of malnutrition, and sick child services in 2020. Furthermore, 70% of countries also reported disruptions in routine immunization. Due to the factors mentioned above, supply chain management and products’ availability were deficient, impacting the sales of organic baby food products.

LATEST TRENDS

Evolving Trend of Organic Milk Formulas to Sustain Market Development

With the increase in number of working women, consumer preference toward buying milk formulas has increased over the last few years. However, it has been observed that infant formulas with artificial ingredients do not contain the immunity-boosting elements present in breast milk. Still, organic milk formulas are developed using natural ingredients that can provide those elements; hence, consumer preference for these milk formulas is increasing. These milk formulas help in supporting babies who have specific dietary needs. A baby who has unique nutritional needs can get specialized milk formula products. With numerous benefits associated with organic ingredients, milk formulas are becoming the first choice by consumers, mainly in developed countries.

DRIVING FACTORS

Concerns Related to Child Health Stimulate Consumers to Purchase Organic Food Products

The concern about consuming artificial ingredients infused food products by infants and young children has grown over the few years. Parents have become more aware of different food ingredients and are more concerned about what their babies and toddlers consume than what they, as an adult, consume. With rapid internet penetration, parents know what’s new in the market and suitable for their kids and are ready to spend more on baby food than adult food. Moreover, the availability of organic products in smaller towns is also increasing, and this factor is playing a significant role in driving the market growth.

Organic baby food products have gained popularity mainly since the 1990s. Thus, major food manufacturers are interested in these products, considering their popularity in the baby food category. At that time, H.J. Heinz, one of the largest baby food companies, acquired Earth’s Best baby food in March 1996. After that, Gerber launched its organic baby foods by the name ‘Tender Harvest’ in October 1997. Since then, many key players in this market have entered this market, and various products are available. This increased penetration of organic products in tier 2 and tier 3 cities has also helped the market to grow in smaller towns. This factor is also expected to prosper the market growth in the coming years.

Promotion and Marketing in Mainstream Distribution Channels Driving the Market

The market growth of organic baby food products has seen an upward trend in the last few years. The market is transforming slowly from niche category to significant industry category. The availability of products differs widely with each country depending on the market environment. In developed countries, such as Germany, the market for organic baby food products is strong as large retail chains account for about 70% of products sold in Germany. Although these products are costlier than conventional products, retailers apply higher discounts, which make the consumer buy the products. Expansion of supermarkets and hypermarkets in tier 2 and tier 3 cities is a major driving factor for the growth of the market in developing countries as consumers are aware of the products and are buying them for the last few years. With the expansion of supermarkets/hypermarkets during upcoming years, the market is expected to boost.

RESTRAINING FACTORS

High Costs Related to Organic Products to Hinder Market Growth

The adoption rate of organic food products is comparatively slow in the developing market, mainly in South Asia and Africa. Lack of awareness and knowledge among majority consumers creates temporary demand from a limited income group. This further affects the growth of the industry. In developing countries, the concern for safe food is far away for the majority of the consumers. Majority of the developing countries are price-sensitive nations, with wide diversity in earning power. Organic food is costlier in price than conventional food products. Consumers who are unaware of these products hesitate to spend that much on food. This vast difference between the prices poses challenges for organic products in these countries. This factor is expected to act as a significant challenge for the market growth in developing countries.

SEGMENTATION

By Type Analysis

Wet Food Holds Major Organic Baby Food Market Share owing to Wide Range of Products Availability

The market is segmented into wet food, infant milk formula, and dry food based on type. Parents of infants and toddlers mainly prefer liquid food as they are easy to eat and digest; hence, market players also have 60-70% of products in the wet food category in their portfolio. With more players entering the market and introducing a variety of fruit flavors in puree blends, this segment is expected to retain its dominance in the type segment.

The infant milk formula segment is expected to grow with the highest CAGR as there is an increase in the working women population worldwide. As the number of working women is increasing, the need to provide more nutritionally stable food to the kids is increasing, and thus milk formulas are becoming popular. Dry food will grow with a steady CAGR as dry organic baby food demand is stable and rising slowly.

By Distribution Channel Analysis

Broader Availability of Products & Freedom to Purchase to Promote Sales via Supermarkets/Hypermarkets

By distribution channel, the market is segmented into supermarkets/hypermarkets, specialty stores, online sales channels, and others. Supermarkets/hypermarkets are expanding rapidly. Supermarkets are now limited to only rich consumers, and over the past few years, supermarket chains have been spreading from wealthy areas of big cities to much smaller towns. Rising incomes, rapid urbanization, increase in female participation in the labor force, and adoption of western culture are the major factors that are helping the supermarkets industry to expand so rapidly. The factors mentioned above would prevail in the coming years, and thus this segment is expected to dominate the market during the forecast period.

The online sales channels segment is expected to grow with the highest CAGR owing to easy accessibility due to the increasing internet penetration worldwide. Specialty stores and other segments will experience slower growth owing to lower discount offers.

REGIONAL INSIGHTS

North America remains the dominant region in the market due to significant market players and higher spend capacity of consumers in these regions. Booming organic food sector in the region has contributed to the increasing demand for several baby food products. In addition, leading brands are also using strategic activities to increase the sale of their line of baby food products in these regions. The entry on newer, smaller players is intensifying the market competition in the region

Europe is expected to record a notable CAGR, owing to the growing demand for clean-label and sustainable baby food products. Consumer preferences regarding baby food have shifted toward buying safer, healthier, and organic products over the past few years. Thus, the increasing demand for organic, non-GMO, lactose-free, and plant-based products will drive the regional growth over 2021-2028. Many consumers in Europe are willing to pay a premium price for organic baby food products. They are aware of the positive impact on personal health, environment, food safety, taste, and appearance of organic products and have higher spending capacity.

Asia Pacific is one of the fastest developing regions owing to changing consumer preferences towards organic products. Increasing disposable incomes of consumers and changing lifestyles are driving organic product consumption. Moreover, the expansion of the supermarket sector across developing Asia Pacific countries will strengthen the regional outlook.

The markets in the Middle East & Africa and South America will record slow growth in the market owing to lower penetration of organic products. Brazil is anticipated to dominate the market share in South America. In the Middle East & Africa, the increasing lifestyle of middle-income groups is expected to boost the market with steady market growth.

KEY INDUSTRY PLAYERS

Nestle Focused on Expanding Its Line of Organic Baby Food Products in New and Developing Markets

Nestle is a major player in the baby food industry with its portfolio having a wide variety of products. Nestle is continuously looking to expand its reach in newer markets globally and bolster its presence in the market. In 2019, Nestle India launched an organic product within its Ceregrow brand of cereals. These products are specially made for children over the age of 12 months and are made using 100% organic wheat, milk, ragi, and rice.

The organic baby food market growth is expected to escalate as infant food products are expected to expand into more households. Considering this factor, Nestle is looking forward to making the most of it by strengthening its market position in the developing markets. Apart from this, other market players are also looking at India as a prominent market. In January 2021, India’s baby food brand “Timios” unveiled a new manufacturing model expected to meet the demand for organic baby products. It launched 12 varieties of baby porridge range aimed at babies and toddlers between 6 and 18 months.  

LIST OF KEY COMPANIES PROFILED:

• Kraft Heinz Canada ULC (Illinois, U.S.)


• Nestlé S.A. (Vevey, Switzerland)


• Danone S.A. (Paris, France)


• Plum Organics (California, U.S.)


• HiPP GmbH & Co. Vertrieb KG (Pfaffenhofen, Germany)


• Pristine Organics Pvt Ltd. (Bengaluru, India)


• Yashili International Group Co., Ltd. (Guangdong, China)


• GMP Dairy (Auckland, New Zealand)


• Arla Foods (Central Denmark Region, Denmark)


• Kewpie Corporation (Tokyo, Japan)

KEY INDUSTRY DEVELOPMENTS:

• April 2021 –Happy Family Organics launched a new pouch line, Happy Baby Savory Blends. These products are specially made for infants and toddlers over 6 months.


• March 2021 – Sun-Maid Growers of California acquired Plum Organics, which is a leading premium, organic baby food, and kid’s snacks brand from Campbell Soup Company. Through this acquisition, Sun-Maid is focusing on strengthening its market position in the baby food industry.

REPORT COVERAGE

The market report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading product distribution channels. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market over recent years.

Report Scope & Segmentation: