BABY FOOD IN INDIA

Euromonitor International
September 2018
BABY FOOD IN INDIA Passport I

LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Prospects ..................................................................................................................................... 1
Stringent Government Regulations Keep Baby Food in Check ................................................ 1
Mothers Become More Confident Choosing the Right Food for Their Babies .......................... 1
Tax Revisions Helps Weaken Unit Price Growth in Dried Baby Food ...................................... 2
Competitive Landscape ................................................................................................................ 2
Nestlé Continues To Dominate Baby Food ............................................................................... 2
Wattle Health Enters Baby Food in India .................................................................................. 2
Reckitt Benckiser Group the Best Performer in Baby Food ...................................................... 2
Category Data .............................................................................................................................. 2
Table 1 Sales of Baby Food by Category: Volume 2013-2018.................................. 2
Table 2 Sales of Baby Food by Category: Value 2013-2018 .................................... 3
Table 3 Sales of Baby Food by Category: % Volume Growth 2013-2018 ................. 4
Table 4 Sales of Baby Food by Category: % Value Growth 2013-2018 .................... 4
Table 5 NBO Company Shares of Baby Food: % Value 2014-2018 ......................... 4
Table 6 LBN Brand Shares of Baby Food: % Value 2015-2018 ................................ 5
Table 7 Distribution of Baby Food by Format: % Value 2013-2018........................... 6
Table 8 Forecast Sales of Baby Food by Category: Volume 2018-2023................... 6
Table 9 Forecast Sales of Baby Food by Category: Value 2018-2023...................... 7
Table 10 Forecast Sales of Baby Food by Category: % Volume Growth 2018-
2023 ............................................................................................................. 7
Table 11 Forecast Sales of Baby Food by Category: % Value Growth 2018-
2023 ............................................................................................................. 8

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BABY FOOD IN INDIA Passport 1

BABY FOOD IN INDIA

HEADLINES
 In 2018 baby food records retail current value growth of 13% to reach sales of INR53.2 billion
 Mothers become more confident choosing the right food for their babies
 Growing-up milk formula registers the strongest retail current value growth of 24%
 Average unit price rises by 10% in current terms in dried baby food and 15% in growing-up
milk formula
 Nestlé India continues to dominate baby food with a retail value share of 60%
 Over the forecast period baby food is expected to post a value CAGR of 4% at constant 2018
prices to reach sales of INR65.6 billion in 2023

PROSPECTS

Stringent Government Regulations Keep Baby Food in Check

Through the Infant Milk Substitutes (IMA) Act of 1992, the Indian government seeks to
promote breastfeeding by controlling the promotional activities of baby food manufacturers,
especially with regard to infant milk formula. The act completely prohibits baby food
manufacturers from engaging in any type of promotion or marketing for infant formula. Several
non-governmental organisations, such as the Breastfeeding Promotion Network of India (BPNI),
have joined hands to promote breast milk as best for babies. Despite such efforts by the
government, baby food manufacturers approach doctors and paediatricians through their
medical representatives to promote their products. Hence, it is often suggested to new mothers
that they buy a specific milk formula depending on the needs of their babies. Another
consequence of such regulations is a lack of new product development in standard and follow-
on milk formula from the leading players. Indeed, the rules are expected to become stricter in
the coming years as the Food Safety and Standards Authority of India (FSSAI) drafted a new
regulation for all baby food in December 2017.

Mothers Become More Confident Choosing the Right Food for Their
Babies
Second-time mothers are finding it easier to choose dried baby food and infant formula
following their experiences with their first born, albeit still after consulting a doctor or
paediatrician. In addition, more educated mothers are extensively researching products online
via social media platforms and parenting forums. When choosing dried baby food, they have
become very particular about flavours, ingredients and brand name. In the case of milk formula,
products for different age groups, nutritional information and brand name are thoroughly
scrutinised before purchase. First-time mothers initially depend on doctors when choosing the
right food for their babies but over time become more confident making their own choices. This
increase in confidence is having a positive impact on the growth of baby food in India. Word-of-
mouth recommendations, advice from more experienced mothers and comments and feedback
on social media are all helping to support the further development of the category.

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Tax Revisions Helps Weaken Unit Price Growth in Dried Baby Food
With the introduction of a Goods and Services Tax (GST) in 2017 and its subsequent revision
in 2018, the tax on baby food was reduced by 2%. The benefits were passed on to consumers
in the form of lower prices. Infant milk formula was brought under the 5% tax bracket following
the revision. However, manufacturers had increased the unit prices of various infant milk
formulas by 8-11% over the review period, and given the strict regulations on the promotion and
marketing of infant milk formula, there was no significant increase in unit price in 2018. This
served to slightly weaken the growth of infant milk formula in 2018 when compared to the review
period average.

COMPETITIVE LANDSCAPE

Nestlé Continues To Dominate Baby Food

Thanks to popular brands such as Cerelac and Lactogen, Nestlé continued to dominate baby
food in 2018. The company, which has been present in India for decades, has established itself
as a trusted manufacturer of baby food. Nestlé offers a range of baby foods to meet the needs
of different age groups. In addition, the company benefits from a strong distribution network.
However, in 2018, the company continued to lose share as many urban parents wanted to try
out new products. A lack of innovation due to existing products meeting the needs of local
parents has been another factor impacting the performance of Nestlé in baby food.

Wattle Health Enters Baby Food in India

The Australian dairy manufacturer Wattle Health entered baby food in India in early 2018. The
company secured a deal with Vasudevan and Sons, a local distributor in Chennai, to initially sell
dried baby food and prepared baby food, while looking to also offer infant formula at a later date.
The entry of a new player will pose a strong challenge to existing manufacturers. However,
Wattle Health itself will face challenges due to restrictions on the promotion of baby food in
India, although growth could be supported by mothers’ increasing willingness to explore new
baby food options. The company has an edge over other manufacturers as it is offering
prepared baby food, the range of which is currently very limited in India.

Reckitt Benckiser Group the Best Performer in Baby Food

The best performing company in baby food in GBO terms in 2018 was Reckitt Benckiser
Group (RB), closely followed by Abbott Laboratories. RB acquired Mead Johnson Nutrition in
early 2017 to enter baby food in India. Although the company has a low sales base, its Enfamil
and Enfapro were two of the fastest growing brands in milk formula in 2018, along with Abbott
Laboratories’ Similac and PediaSure. At the end of 2017, Abbott also launched PediaSure
Nutrishake, a healthy and tasty snack for children over the age of two in a ready to drink format,
which was well received in India.

CATEGORY DATA
Table 1 Sales of Baby Food by Category: Volume 2013-2018

'000 tonnes
2013 2014 2015 2016 2017 2018

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Dried Baby Food 28.5 29.7 30.8 32.2 33.2 34.2

Prepared Baby Food - - - - - -
Other Baby Food 5.6 6.0 6.3 6.7 7.1 7.6
Milk Formula 24.7 25.4 26.1 26.9 27.8 28.5
- Standard Milk Formula 11.1 11.4 11.7 11.8 12.0 12.1
-- Liquid Standard Milk - - - - - -
Formula
-- Powder Standard Milk 11.1 11.4 11.7 11.8 12.0 12.1
Formula
- Follow-on Milk Formula 10.7 11.0 11.3 11.8 12.2 12.6
-- Liquid Follow-on - - - - - -
Milk Formula
-- Powder Follow-on 10.7 11.0 11.3 11.8 12.2 12.6
Milk Formula
- Growing-Up Milk Formula 2.5 2.5 2.6 2.8 3.0 3.2
-- Liquid Growing-Up - - - - - -
Milk Formula
-- Powder Growing-Up 2.5 2.5 2.6 2.8 3.0 3.2
Milk Formula
- Special Baby Milk 0.5 0.5 0.5 0.5 0.6 0.6
Formula
-- Liquid Special Baby - - - - - -
Milk Formula
-- Powder Special Baby 0.5 0.5 0.5 0.5 0.6 0.6
Milk Formula
Baby Food 58.8 61.1 63.2 65.9 68.1 70.3
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 2 Sales of Baby Food by Category: Value 2013-2018

INR million
2013 2014 2015 2016 2017 2018

Dried Baby Food 11,664.2 13,530.5 15,676.4 18,463.5 20,882.3 23,555.2

Prepared Baby Food - - - - - -
Other Baby Food 464.3 506.1 547.1 588.1 632.8 680.7
Milk Formula 15,389.0 17,658.2 20,052.3 22,662.3 25,623.4 28,994.4
- Standard Milk Formula 7,957.0 9,082.0 10,335.0 11,714.0 13,201.7 14,856.5
-- Liquid Standard Milk - - - - - -
Formula
-- Powder Standard Milk 7,957.0 9,082.0 10,335.0 11,714.0 13,201.7 14,856.5
Formula
- Follow-on Milk Formula 6,298.0 7,277.0 8,237.0 9,175.0 10,269.0 11,512.7
-- Liquid Follow-on - - - - - -
Milk Formula
-- Powder Follow-on 6,298.0 7,277.0 8,237.0 9,175.0 10,269.0 11,512.7
Milk Formula
- Growing-Up Milk Formula 858.6 984.0 1,123.6 1,367.0 1,687.7 2,094.4
-- Liquid Growing-Up - - - - - -
Milk Formula
-- Powder Growing-Up 858.6 984.0 1,123.6 1,367.0 1,687.7 2,094.4
Milk Formula
- Special Baby Milk 275.5 315.2 356.6 406.3 465.0 530.8
Formula
-- Liquid Special Baby - - - - - -
Milk Formula
-- Powder Special Baby 275.5 315.2 356.6 406.3 465.0 530.8
Milk Formula

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Baby Food 27,517.5 31,694.7 36,275.7 41,714.0 47,138.5 53,230.3

Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 3 Sales of Baby Food by Category: % Volume Growth 2013-2018

% volume growth
2017/18 2013-18 CAGR 2013/18 Total

Dried Baby Food 2.9 3.7 20.0

Prepared Baby Food - - -
Other Baby Food 5.7 6.3 35.5
Milk Formula 2.8 2.9 15.4
- Standard Milk Formula 0.9 1.6 8.5
-- Liquid Standard Milk Formula - - -
-- Powder Standard Milk Formula 0.9 1.6 8.5
- Follow-on Milk Formula 3.5 3.5 18.7
-- Liquid Follow-on Milk Formula - - -
-- Powder Follow-on Milk Formula 3.5 3.5 18.7
- Growing-Up Milk Formula 7.7 5.6 31.2
-- Liquid Growing-Up Milk Formula - - -
-- Powder Growing-Up Milk Formula 7.7 5.6 31.2
- Special Baby Milk Formula 3.9 4.2 23.0
-- Liquid Special Baby Milk Formula - - -
-- Powder Special Baby Milk Formula 3.9 4.2 23.0
Baby Food 3.2 3.6 19.5
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 4 Sales of Baby Food by Category: % Value Growth 2013-2018

% current value growth

2017/18 2013-18 CAGR 2013/18 Total

Dried Baby Food 12.8 15.1 101.9

Prepared Baby Food - - -
Other Baby Food 7.6 8.0 46.6
Milk Formula 13.2 13.5 88.4
- Standard Milk Formula 12.5 13.3 86.7
-- Liquid Standard Milk Formula - - -
-- Powder Standard Milk Formula 12.5 13.3 86.7
- Follow-on Milk Formula 12.1 12.8 82.8
-- Liquid Follow-on Milk Formula - - -
-- Powder Follow-on Milk Formula 12.1 12.8 82.8
- Growing-Up Milk Formula 24.1 19.5 143.9
-- Liquid Growing-Up Milk Formula - - -
-- Powder Growing-Up Milk Formula 24.1 19.5 143.9
- Special Baby Milk Formula 14.2 14.0 92.7
-- Liquid Special Baby Milk Formula - - -
-- Powder Special Baby Milk Formula 14.2 14.0 92.7
Baby Food 12.9 14.1 93.4
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 5 NBO Company Shares of Baby Food: % Value 2014-2018

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BABY FOOD IN INDIA Passport 5

% retail value rsp

Company 2014 2015 2016 2017 2018

Nestlé India Ltd 64.9 64.6 62.9 61.4 59.5

Nutricia International 10.7 11.2 11.3 11.4 11.5
Pvt Ltd
Raptakos Brett & Co Ltd 4.6 4.2 3.9 3.7 3.5
Abbott India Ltd 2.4 2.4 2.6 2.8 3.1
Abbott Laboratories Inc 2.8 2.8 2.8 2.9 3.1
Mead Johnson Nutrition 0.8 1.1 1.3 1.4 1.5
India Pvt Ltd
Wockhardt Ltd - - - - -
Others 13.8 13.6 15.3 16.5 17.8
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 6 LBN Brand Shares of Baby Food: % Value 2015-2018

% retail value rsp

Brand (GBO) Company (NBO) 2015 2016 2017 2018

Cerelac (Nestlé SA) Nestlé India Ltd 30.9 30.0 29.0 27.8
Lactogen (Nestlé SA) Nestlé India Ltd 16.5 15.9 15.5 14.9
Nan (Nestlé SA) Nestlé India Ltd 8.4 8.2 8.3 8.4
Dexolac (Danone, Nutricia International 6.7 6.7 6.8 6.8
Groupe) Pvt Ltd
Nestum (Nestlé SA) Nestlé India Ltd 5.5 5.3 5.1 4.9
Lactodex (Bombay Raptakos Brett & Co Ltd 4.1 3.8 3.6 3.4
Oxygen Corp Ltd)
Nestogen (Nestlé SA) Nestlé India Ltd 3.3 3.3 3.3 3.3
PediaSure (Abbott Abbott India Ltd 2.4 2.6 2.8 3.1
Laboratories Inc)
Similac Abbott Laboratories Inc 2.8 2.8 2.9 3.1
Farex (Danone, Nutricia International 2.5 2.5 2.6 2.7
Groupe) Pvt Ltd
Nusobee (Danone, Nutricia International 0.9 0.9 1.0 1.0
Groupe) Pvt Ltd
Enfapro (Reckitt Mead Johnson Nutrition - - 0.7 0.8
Benckiser Group Plc India Pvt Ltd
(RB))
Enfamil (Reckitt Mead Johnson Nutrition - - 0.6 0.7
Benckiser Group Plc India Pvt Ltd
(RB))
Easum (Danone, Nutricia International 0.5 0.5 0.5 0.6
Groupe) Pvt Ltd
First Food (Danone, Nutricia International 0.6 0.6 0.6 0.5
Groupe) Pvt Ltd
Neslac (Nestlé SA) Nestlé India Ltd 0.1 0.1 0.2 0.2
Veelac (Bombay Raptakos Brett & Co Ltd 0.1 0.1 0.1 0.1
Oxygen Corp Ltd)
Enfapro (Mead Mead Johnson Nutrition 0.6 0.7 - -
Johnson Nutrition Co) India Pvt Ltd
Enfamil (Mead Mead Johnson Nutrition 0.5 0.6 - -
Johnson Nutrition Co) India Pvt Ltd
Dexolac Wockhardt Ltd - - - -
Easum Wockhardt Ltd - - - -
Farex (Heinz Co, HJ) Wockhardt Ltd - - - -

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First Food Wockhardt Ltd - - - -

Others Others 13.6 15.3 16.5 17.8
Total Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 7 Distribution of Baby Food by Format: % Value 2013-2018

% retail value rsp

2013 2014 2015 2016 2017 2018

Store-Based Retailing 100.0 100.0 100.0 98.8 97.5 96.3

- Grocery Retailers 40.3 40.9 41.5 40.9 41.2 41.2
-- Modern Grocery 8.7 8.9 9.2 9.4 10.0 10.3
Retailers
--- Convenience Stores 0.8 0.8 0.9 0.9 0.9 0.9
--- Discounters - - - - - -
--- Forecourt Retailers - - - - - -
--- Hypermarkets 2.0 2.0 2.1 2.2 2.5 2.6
--- Supermarkets 5.9 6.0 6.1 6.2 6.6 6.8
-- Traditional Grocery 31.6 32.0 32.3 31.5 31.2 30.9
Retailers
--- Food/drink/tobacco - - - - - -
specialists
--- Independent Small 31.6 32.0 32.3 31.5 31.2 30.9
Grocers
--- Other Grocery - - - - - -
Retailers
- Non-Grocery Specialists 59.7 59.1 58.5 57.9 56.4 55.1
-- Health and Beauty 59.7 59.1 58.5 57.9 56.4 55.1
Specialist Retailers
-- Other Foods Non- - - - - - -
Grocery Specialists
- Mixed Retailers - - - - - -
Non-Store Retailing - - - 1.2 2.5 3.7
- Vending - - - - - -
- Homeshopping - - - - - -
- Internet Retailing - - - 1.2 2.5 3.7
- Direct Selling - - - - - -
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 8 Forecast Sales of Baby Food by Category: Volume 2018-2023

'000 tonnes
2018 2019 2020 2021 2022 2023

Dried Baby Food 34.2 35.1 36.1 37.1 38.0 39.0

Prepared Baby Food - - - - - -
Other Baby Food 7.6 7.9 8.3 8.6 9.0 9.2
Milk Formula 28.5 29.3 30.0 30.7 31.3 31.9
- Standard Milk Formula 12.1 12.2 12.3 12.3 12.3 12.3
-- Liquid Standard Milk - - - - - -
Formula
-- Powder Standard Milk 12.1 12.2 12.3 12.3 12.3 12.3
Formula

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- Follow-on Milk Formula 12.6 13.1 13.5 14.0 14.4 14.9

-- Liquid Follow-on - - - - - -
Milk Formula
-- Powder Follow-on 12.6 13.1 13.5 14.0 14.4 14.9
Milk Formula
- Growing-Up Milk Formula 3.2 3.4 3.6 3.7 3.9 4.0
-- Liquid Growing-Up - - - - - -
Milk Formula
-- Powder Growing-Up 3.2 3.4 3.6 3.7 3.9 4.0
Milk Formula
- Special Baby Milk 0.6 0.6 0.6 0.7 0.7 0.7
Formula
-- Liquid Special Baby - - - - - -
Milk Formula
-- Powder Special Baby 0.6 0.6 0.6 0.7 0.7 0.7
Milk Formula
Baby Food 70.3 72.4 74.4 76.4 78.3 80.1
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 9 Forecast Sales of Baby Food by Category: Value 2018-2023

INR million
2018 2019 2020 2021 2022 2023

Dried Baby Food 23,555.2 25,093.4 26,454.2 27,594.9 28,479.7 29,077.5

Prepared Baby Food - - - - - -
Other Baby Food 680.7 691.3 694.6 690.4 678.7 659.9
Milk Formula 28,994.4 30,967.7 32,704.4 34,137.2 35,208.5 35,869.4
- Standard Milk Formula 14,856.5 15,768.3 16,539.3 17,141.1 17,551.2 17,752.1
-- Liquid Standard Milk - - - - - -
Formula
-- Powder Standard Milk 14,856.5 15,768.3 16,539.3 17,141.1 17,551.2 17,752.1
Formula
- Follow-on Milk Formula 11,512.7 12,208.3 12,831.6 13,365.8 13,797.2 14,113.2
-- Liquid Follow-on - - - - - -
Milk Formula
-- Powder Follow-on 11,512.7 12,208.3 12,831.6 13,365.8 13,797.2 14,113.2
Milk Formula
- Growing-Up Milk Formula 2,094.4 2,419.3 2,724.5 2,989.1 3,192.7 3,317.6
-- Liquid Growing-Up - - - - - -
Milk Formula
-- Powder Growing-Up 2,094.4 2,419.3 2,724.5 2,989.1 3,192.7 3,317.6
Milk Formula
- Special Baby Milk 530.8 571.8 609.0 641.2 667.4 686.5
Formula
-- Liquid Special Baby - - - - - -
Milk Formula
-- Powder Special Baby 530.8 571.8 609.0 641.2 667.4 686.5
Milk Formula
Baby Food 53,230.3 56,752.4 59,853.2 62,422.5 64,366.9 65,606.9
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 10 Forecast Sales of Baby Food by Category: % Volume Growth 2018-2023

% volume growth

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2018/19 2018-23 CAGR 2018/23 Total

Dried Baby Food 2.8 2.7 14.0

Prepared Baby Food - - -
Other Baby Food 5.2 4.0 21.9
Milk Formula 2.6 2.3 11.9
- Standard Milk Formula 0.8 0.4 2.0
-- Liquid Standard Milk Formula - - -
-- Powder Standard Milk Formula 0.8 0.4 2.0
- Follow-on Milk Formula 3.5 3.3 17.4
-- Liquid Follow-on Milk Formula - - -
-- Powder Follow-on Milk Formula 3.5 3.3 17.4
- Growing-Up Milk Formula 5.5 4.6 25.5
-- Liquid Growing-Up Milk Formula - - -
-- Powder Growing-Up Milk Formula 5.5 4.6 25.5
- Special Baby Milk Formula 3.8 3.7 20.1
-- Liquid Special Baby Milk Formula - - -
-- Powder Special Baby Milk Formula 3.8 3.7 20.1
Baby Food 3.0 2.7 14.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 11 Forecast Sales of Baby Food by Category: % Value Growth 2018-2023

% constant value growth

2018/2019 2018-23 CAGR 2018/23 Total

Dried Baby Food 6.5 4.3 23.4

Prepared Baby Food - - -
Other Baby Food 1.6 -0.6 -3.0
Milk Formula 6.8 4.3 23.7
- Standard Milk Formula 6.1 3.6 19.5
-- Liquid Standard Milk Formula - - -
-- Powder Standard Milk Formula 6.1 3.6 19.5
- Follow-on Milk Formula 6.0 4.2 22.6
-- Liquid Follow-on Milk Formula - - -
-- Powder Follow-on Milk Formula 6.0 4.2 22.6
- Growing-Up Milk Formula 15.5 9.6 58.4
-- Liquid Growing-Up Milk Formula - - -
-- Powder Growing-Up Milk Formula 15.5 9.6 58.4
- Special Baby Milk Formula 7.7 5.3 29.3
-- Liquid Special Baby Milk Formula - - -
-- Powder Special Baby Milk Formula 7.7 5.3 29.3
Baby Food 6.6 4.3 23.3
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

© Euromonitor International