Retailers and Manufacturers Are Bringing Up Baby, Together

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Retailers and Manufacturers Are Bringing Up Baby, Together

Baby food is on real roll these days, helped along by collaboration between suppliers and retailers, according to Dianne Jacobs, s.v.p. U.S. infant nutrition at Nestlé/Gerber.

She attributes growth today in the category -- now at $1.3 billion in sales, not counting infant formula and nutritional beverages -- to three factors: innovative products, more "up-age" items targeting toddlers and preschoolers, and high Hispanic birth rates. Nestlé/Gerber alone has driven over $250 million dollars in category growth over the past six years, she says.

"Baby and toddler nutrition have demonstrated sustained growth, due to strong nutritional and packaging innovation to meet the increasing parental needs to enhance health and wellness in their children through nutrition," notes Jacobs. "This is evidenced by the emerging growth in organics, fortified/functional foods, and all-natural products. Retailers benefit from this nutritional innovation as it trades up consumers to premium price points."

The baby and toddler products generally have higher price points and retail margins, making it attractive for retailers to create shelf space-but that's easier said than done. "One challenge that retailers will face is that shelf space expansion has not kept up with the pace of toddler and preschooler innovation," admits Jacobs. "Retailers will need to assess category space to ensure they can participate in this growth."

This is where collaboration can kick in. For instance, grocers can explore shopper interactions and shelf configuration possibilities within the dynamic confines of Nestlé/Gerber's Retail Innovation Center, a platform for testing creative aisle solutions.

Nestlé/Gerber is also fueling growth through its "Voice of Mom" consumer and shopper insights program, which has led to the creation of optimal age-/stage-based planograms, as well as navigational point of sale to communicate age-flow/transition timing. "Moms are receptive to education at shelf via point-of-sale materials," notes Jacobs.

Bringing customers back to the baby food section is key. "Retailers should focus on buyer conversion and create traffic-driving solutions focused on the most productive segments and items in the assortment," says Jacobs.

Among the trends starting to have a significant impacts on the category are mothers who are more sophisticated about nutritional information and child development, thanks to self-education via the Internet; increased participation in the WIC (Women Infants and Children) program; and the growing natural/organic contingent.

"A segment of consumers prefers to feed their babies organic and all-natural products, and this decision often begins during pregnancy," explains Jacobs. "Retailers should dedicate sufficient shelf space to establish an organic presence for all consumers. All-natural and no-preservative benefits will continue to appeal to the broadest segment of consumers."

New products from Nestlé/Gerber include Graduates Yogurt Melts snacks, which Jacobs describes as "one of the most successful launches ever in the category"; the forthcoming Graduates line of healthy meals designed specifically for preschoolers; and three new dinner purees with enhanced DHA fortification, expanding the company's portfolio of DHA-enhanced products to encompass fruits, vegetables, cereals, and now dinners. Jacobs expects the latter two lines to roll out in September.

Also on the agenda are a new organic dinner of chicken with country vegetables and rice, the reintroduction of Gerber organic cereal, the conversion of 50 percent of the entire cereal line to whole grain by the end of the year, and the launch of Gerber pure water, which will be available nationwide by the close of 2008.

When it comes to frozen baby foods, though, Nestle/Gerber has nothing definite planned -- yet. "Frozen baby food is currently a niche market," suggests Jacobs. "As the leader in early childhood nutrition, Gerber evaluates all options [that] meet emerging and future needs of mothers and their children."

Ultimately, education is the foundation upon which category growth will continue to occur, says Jacobs. "By partnering with retailers, we can collectively educate moms about proper nutritional needs of infants and toddlers to assist them to make smart choices at the shelf."