Baby food is a product that most Ukrainian families face at different times. It is used as a supplement or replacement for breastfeeding in children under 3 years of age. According to the WHO (World Health Organization) recommendation, up to 6 months the child should receive exclusively mother’s milk, after that it is allowed to supplement the diet with baby food.
The importance of this product is due to the fact that it contains such important components for the child, such as proteins, fats, carbohydrates, vitamins and trace elements. While in breast milk this balance can be disturbed due to the influence of negative environmental factors.
As a percentage of infants to body weight, children eat and drink significantly more than adults. Therefore, baby food is balanced in such a way that the child’s body receives as many healthy substances as possible and minimize excess organic matter.
Read also: Gambling business: analyzing the market of children’s entertainment complexes
Analysis of the baby food market: production and consumption dynamics
The following product categories are present in the Ukrainian baby food market:
- powdered milk-based formula;
- cereal porridge with the addition of milk powder and fruit;
- milk-based formula;
- fruit and vegetable mixes and purees;
- mashed meats;
- baby juices and waters.
The qualitative and quantitative indicators of the baby food market are determined by a number of factors, including the purchasing power of the population, birth rates, availability of domestic production, and prices of raw materials.
According to open data on the website of the State Statistics Service of Ukraine, in 2015-2017, 1 million 172 thousand children were born in the country, which gives us general information about the quantitative composition of consumers of the product.
Using Gosstat data, we can draw conclusions about the volume of baby food consumption using the formula: “Consumption = Production + Imports – Exports”.
Analyzing the graph, several conclusions can be drawn:
- Since the crisis year of 2014, there has been a decrease in the consumption of baby food, associated with a decline in the purchasing power of the population and the birth rate. The latter factor plays a smaller role, since while the birth rate fell from 503.7 thousand in 2013 to 465.9 thousand in 2014, the consumption rate increased during this period.
- In 2013-2015, there was an increase in baby food production in Ukraine with a decrease in imports and an increase in exports. The decrease in production volumes in 2015 was replaced by a sharp increase, which is explained by an increase in demand due to lower inflation and improved purchasing power of the population.
Nielsen research states a 16.4% increase in sales by volume in 2017, and an 8.9% increase a year earlier. In monetary terms, the figures grew by 19.1% and 14.3%, respectively. Company analysts attribute this primarily to a decline in the inflation rate in this category from 5% to 2.4%. If we take into account the growth of imported products, which are more expensive than domestic products, we can also talk about the consumer’s desire to purchase higher quality products and orientation towards popular Western brands.
Read also: Analyzing the baby products market
Among other trends in the Ukrainian baby food market identified by Nielsen analysts are the following.
- The largest segment in physical terms (52.8% of total sales) is children’s water. However, in monetary terms, the market share in 2017 was only 6%. The annual growth rates were 18.6% and 22.1%, respectively.
- In monetary terms, infant formulae have the largest market share (41.1%), with 18.7% in volume terms.
- Viscous baby food showed the highest growth in 2017 (31.3% in monetary terms and 17.4% in volume terms). These figures are almost identical to their market share of 31% 17.5% respectively.
According to the State Statistics Committee, the production of baby food in January-August 2018 amounted to 4,879 tons, showing an increase of 41.8% year-on-year.
You can find out the trends in the market you are interested in by ordering a market research in KOLORO. Contact us and tell us about your project.
Baby food research: exports and imports
The largest exporters to Ukraine are EU countries, which in 2017 supplied our country with 5529.3 tons of baby food (Poland – 2336.5 tons, Switzerland – 1286.9 tons, Germany – 641.8 tons, Netherlands – 523.1 tons, Slovenia – 340.9 tons, Croatia – 163.5 tons. Also important and suppliers are Belarus with 236.4 tons, New Zealand with 37.6 tons and Israel with 20.6 tons. The territorial structure of imports remained the same in 2018. From January to August this year, 3,775.3 tons of baby food were supplied to Ukraine from EU countries. There has also been a noticeable increase in shipments from Israel and New Zealand.
Ukrainian producers are not actively exploring foreign markets, which is evident from the graph.
The infographic points to two features.
- 2012 max. An almost tenfold increase in exports was achieved by actively increasing supplies of baby food to the countries of the former USSR – Kyrgyzstan, Azerbaijan, Moldova, Turkmenistan and Armenia. The following year, only Moldova remained among the importing countries of Ukrainian products, joined by Russia.
- Gradual increase in exports since 2013. The Association Agreement with the EU has not significantly affected foreign trade in baby food. It is still difficult for our manufacturers to compete in the European market.
At the same time, it manages to hold on to traditional markets. In 2017, exports to Moldova totaled 233.7 tons, 203.5 tons to Vietnam, 23.2 tons to Georgia and about 15 tons to Azerbaijan and Turkey. Small quantities of baby food were supplied to Hong Kong and China.
The most successful was the work on entering the UAE market. While last year only 14.4 kg of baby food was delivered there, as of August exports to the Arab Emirates amounted to 1.7 tons. Therefore, analysts recommend Ukrainian food producers to concentrate their efforts on promising markets of dynamically developing countries in Africa, as well as in South-East Asia and the Middle East.
Read also: The trend to care about the environment: who is using it in marketing
Baby food market analytics: retail performance and leading baby food manufacturers
As already mentioned, the baby food market is dominated by domestically produced products. However, it should be noted that the share of imports in the market is quite high – 45% in physical and 50% in numerical terms.
These graphs show that baby food is most often purchased in large retail chains. It is also noticeable that sales through specialized children’s stores and pharmacies have a more marked disparity between the share of sales in volume and price terms. Entrepreneurs put a higher price, taking advantage of the trust effect from the buyer. That is, parents shopping in pharmacies and children’s stores have less fear of buying counterfeit and expired goods.
The smallest market segment in price terms is occupied by other channels. It is primarily about online commerce. By reducing operating costs, entrepreneurs are able to lower the price, allowing them to successfully compete with offline stores and pharmacies.
The leader of the Ukrainian baby food market is the HIPP brand. In the All-Ukrainian rating “Favorites of Success”, in which the best manufacturers in different categories are determined annually according to the results of consumer and expert voting (%/40%), as well as taking into account the opinions of Ukrainian stars (20% of votes), the brand is invariably among the top three. In the 13 years of the competition (since 2006), HIPP baby breakfasts have won first place 9 times. Leading the brand in the current competition as well. HIPP TM always gets the highest rating.
The Nestlé brand can be placed in second place in the ranking for all years. It has won the overall rankings twice and consistently ranks second in the buyer’s vote (except 2016 – 3rd).
While the consumer is largely focused on the price of the product, experts are guided by quality characteristics. The most frequent winners in this category (4 times) were products under the brands “Malysh”, “Malyshka”, “Malyutka” of PJSC “Khorolsky milk canning plant of children’s products”. This allowed baby food under these brands to enter the top 3 overall rankings three times.
Based on the results of the rating “Favorites of Success” we will identify products for price comparison in Kiev supermarkets.
Each manufacturer makes its products according to its own unique technologies, including different ingredients and adhering to different proportions, and it is not quite correct to compare baby food of different brands with each other. Therefore, the table shows the price range for two categories of baby food: fruit, vegetable and meat purees, as well as porridge and milk formulae.
The table shows approximately the same minimum prices for products of the most popular brands. Maximum prices differ in some cases for the reason that some retailers have premium products in their assortment.
It is also obvious that the reason for the popularity of products of Ukrainian manufacturers is a more affordable price. As can be seen from the cost of baby food STM network FOZZY, the price difference between the products of own production and TM “Malyatko” products is not significant. Therefore, most retail chains prefer to focus more on STM products with higher margins. In addition, the consumer perceives baby food primarily as a balanced set of vitamins and microelements necessary for the full development of the child. Therefore, most parents favor well-known brands with long-standing reputations. Despite the fact that about 50% of consumers express their desire to buy STM baby food in retail chains, its share in total sales does not exceed 1% in monetary and physical terms.
Read also: Limited-edition design: what surprises premium liquor brands
Best brands: analysis of market players
HIPP
An international company founded in Germany in 1932, specializing in organic farming. The company formulates its philosophy as “producing top quality products in harmony with nature”.
The first products under HIPP TM entered the Ukrainian market in 1992, and in 1996 the first representative office of the company in Ukraine was registered. Today 263 HIPP products are available to Ukrainian consumers, 65 of which are milk formulae, porridges, teas.
The logo is the name of the brand, made in soft children’s colors.
The color palette of the logo clearly indicates the target audience of the brand. This color solution is often used in children’s cartoons, as well as advertising aimed at the parental audience.
A slogan is often used with the logo – “The best of nature. The best for nature”. The slogan eloquently characterizes the philosophy of the brand – the production of environmentally friendly products without harming the environment and with benefits for consumers.
Nestlé
A global brand with over 150 years in the business of producing quality baby food. The company was founded by Swiss pharmacist Henri Nestlé, who in the mid-19th century invented infant formula as an alternative to mother’s milk.
Today, baby food is represented by such brands as Nestogen (infant formula), Gerber (fruit and vegetable juices and purees) and Nestlé proper (baby cereal).
The brand’s logo is one of the most recognizable in the world.
It reflects the company’s philosophy of producing natural products for the whole family. The image of a mother bird feeding her babies in a nest evokes associations with care, comfort, and naturalness.
The slogan “Good Food, Good Life” sounds both like an enumeration of brand values and a call to action.
Nestlé works intelligently with its target audience. The main Ukrainian website provides detailed information about the history of the brand, the company’s values, and educational work promoting the culture of healthy eating and lifestyle in general. Especially for moms, a separate website has been created, which, in addition to a detailed description of the company’s range, gives practical advice on the formation of the diet of the child and mother.
You can order slogan creation and packaging design in KOLORO agency. Identity is our specialty.
“Khorolskiy Plant of Children’s Food Products” (TM “Malyutka”, “Malysh”, “Malyshka”)
The only manufacturer of baby and special nutrition in Ukraine, specializing in products for newborns. It was founded in 1972 in the town of Khorol, Poltava region. In 2016, large-scale modernization of production facilities was carried out in accordance with global standards.
Today, the company’s products occupy about 60% of the market in physical terms and about 40% in monetary terms. The company’s baby food is sold in more than 15 thousand retail outlets throughout Ukraine. The daily turnover of the products is more than 10 tons.
The range of products includes milk mixtures “Malyutka” – 3 items, “Malyutka Premium” – 6 items, “Malysh” – 4 items, mixes, “Malyshka” – 5 items. The company also produces milk and butter for cooking for children.
Brands don’t have logos, per se. Cartoon rounded fonts are used to design the packaging.
The company’s philosophy is expressed in the slogan “Our. Ukrainian. Prevened by the years”. In this way, the brand appeals to the patriotic sentiments of the audience and also makes a promise of proven quality.
The company’s website presents the range of products, tells about the history of the company. Like most competitors, HZDPH’s management is actively engaged with the audience. One of the items on the menu is the Malish Club. This is an informational page for mothers with helpful tips on carrying a baby, choosing a diet, etc.
The baby food market in Ukraine is developing in line with the general economic dynamics, demonstrating a trend towards gradual growth. The fall in product prices in recent years was due to a change in the production structure towards juices and a reduction in the share of technologically complex products. However, domestic producers should invest in production modernization, staff development and scientific research. Because, with the increasing prosperity of the population, the consumer will favor better quality and healthier baby food. This trend is evident in the growing popularity of craft and organic products.
Several factors will have a positive impact on the development of the industry.
Increase in birth rate and increase in immigration amidst rising living standards in the country will widen the target audience of baby food.
The introduction of a transparent land market will encourage investment in the agricultural sector and allow enterprises to increase production of their own raw materials, which reduces the cost of production and will be an additional competitive advantage for the producer.
Reform of public administration, in particular of the supervisory bodies, will contribute to the introduction of progressive standardization norms and clear quality requirements.
Improving product quality standards and brand reputation will help Ukrainian manufacturers to retain and strengthen their positions in the domestic market, but also to successfully expand foreign trade activities.
KOLORO branding agency specializes in complex solutions for businesses. Contact our experts to create a baby food brand, or improve the results of an existing one. We know how to please the consumer!
