The infant food market - France

1.2 A global market driven by Chinese demand

Global revenues from the baby food industry are expected to exceed US$*** billion by ****, thanks to growth of *.**%.

sales trends in the baby food industry World, ****-****, US$ billion Source: ****

China is the world's largest baby food market, with sales of over $** billion.the Chinese market is proving to be the world's most promising, particularly for foreign companies who enjoy a high level of trust among local consumers. The health scandal linked to adulterated milk sold by national companies in **** has left its mark in a country where parents are prepared to spend a lot for the well-being of their (***) child. [***]

1.3 The French market, a major player in infant milk

The French infant nutrition market is estimated to exceed US$* billion in ****, thanks to a CAGR of *. *% over the period. However, these growth forecasts need to be put into perspective, given the decline in the number of births in the country. The French market will therefore necessarily shrink in quantity, but could grow in value, thanks in particular to the development of premium offers, with AB (***) certification for example. [***]

sales growth in baby food France, ****-****, US$ billion Source: ****

For its part, LSA presents a figure of €***.* million for the sector in ****. These revenues are broken down into two segments:

Baby milks: **% of sector revenues; Diversification foods (***): €***.** million, or **%.

Source: ****

Within these segments, however, product growth varied. The "homemade" trend favors certain foods, while *st age milks have suffered from the fact that more and more young mothers favor breast-feeding . Consumption per kilogram shows that France nevertheless remains a high consumer of infant milks, relative to the rest of the world market. Danone thus posted sales growth of +**.*% during the first quarter of ****, driven in part by its infant milk division. [***]

1.4 Foreign trade

The results presented below are based on UN Comtrade data corresponding to HS code ******: "Food preparations of flour, groats, meal, starch, malt extract or milk products; for children's consumption, put up for retail sale"Food preparations of flour, groats, meal, starch, malt extracts or dairy products; for children's food, packaged for retail sale"

Exports thus account for a significant proportion of the sector's sales, with French exportswith French exports rising sharplyover the ****-**** period, to both European Union and non-EU countries. In ****, France's main customers will be China and Algeriaand Algeria, followed by the UK,iraq and Egypt, the Libya and italy. As a highly international group, Danone's sales are distributed throughout the world, although almost a third are destined for China.

Export destination by country France, ****, % of sales Source: ****

However, France is also an importer of baby food products. Ireland and Luxembourg alone account for more than **% of French imports, whose origin is less diversified overall. As the French market is dominated by the two giants Danone and Nestlé, we can assume that this reduces the number of foreign players capable of gaining a foothold in the market.

Origin of imports by country France, ****, % of total Source: ****

French exports are ...

2.1 Practicality and trust, key issues

The graph below shows the different purchasing criteria and their importance in the infant food purchasing process by parents. Confidence is the second most important criterion, followed by the availability of special offers (***).

As a result of social change, the average age of parents continues to rise steadily. The hectic pace of work for spouses in the same household may explain why the main criterion for parents' food purchases is time-saving and convenience.

Children's food purchasing criteria for parents France, ****, rating out of * Source: ****

The importance of these criteria is not considered to have changed significantly since ****. On the contrary, the search for practicality has increased, while new generations of parents are increasingly nomadic. This demand is encouraging producers to develop products in transportable formats, in small portions. Expectations in terms of naturalness(***) and traceability have only become more central, whereas the salmonella crises had eroded parents' confidence. Along with organic products, whose trend has been confirmed throughout the decade, homemade products have become a significant benchmark for consumers. [***]

2.2 A market affected by declining demographics

The curve below shows the evolution of the total number of births in France from **** to ****. There will be a gradual decline in the number of births, reaching ***,*** in ****.

A structural decline in the birth rate can be observed in France, where the fertility rate has been set at *.** in ****. This decline concerns all women, whatever their standard of living or age group.

This structural trend is the result of a gradual change in mentality, particularly among the younger generations. Longer periods of study, rising female employment rates and the desire of couples to have a stable situation (***) before having children can all be cited to explain this decline. [***]

Birth trends France, ****-****, thousands of births Source: ****

However, France's demographic dynamism is clearly superior to that of its neighbors. French and Swedish women lead the way, while southern countries such as Spain and Italy (***) record much lower rates.

But relative to other emerging markets, France and Europe are experiencing a certain demographic decline, which is having a major impact on the baby food market by reducing the number of consumers. [***]

The chart below shows the frequency of use of baby or toddler foods (***) in France from **** to ****. In the last year, ...

2.3 The increasingly popular "organic" segment

Ludovic Aujogue, Marketing Director at Nestlé Nutrition Infantile declared in **** that "the organic trend is an underlying trend and our desire is to meet all the expectations of all parents."[***]

evolution of the organic share of the baby food market France, ****, % Source: ****

Companies specializing in this market segment, such as HiPP and Vitagermine, have been joined by food giants such as Nestlé and Danone, who have launched their own products such as NaturNes bio (***) in October ****, joined in March **** by Danone with Les Récoltes bio Blédina.

Market share of the sector's biggest players in the organic segment France, ****, % (***) Source: ****

The Good Goût brand, already an international start-up, has decided to accelerate its expansion and brand awareness by recruiting Kylian MBappé as brand ambassador for children. Proof of the organic craze in the baby food market[***].

Examples of brands and products include

Good Goût - Infant milk powder *rd age ***gr. - **€ BabyBio Menu Sweet corn & Free-range chicken * months * x ***g - €*.** Holle Oil for baby food from * months ***ml - €*.**

It's also important to focus on " made in France ", which can be an effective selling point to boost sales. The new Good Goût, Biostime, Laboratoire Modilac ...

3.1 A highly concentrated market

This statistic shows a ranking of baby or junior food brands in France from **** to ****, by number of users. In ****, an estimated one million people used Blédina. The Blédina and Nestlé brands clearly dominate the market, accounting for over **% of sales in France. These sales are boosted by the constant renewal of their product portfolios and innovations in diversification foods.

Taking only the example of Blédina (***).

Infant food consumption by brand France, ****-****, in tens of thousands of individuals Source: ****

Both brands are facing a decline in the number of consumers despite very high market shares. The biggest increase over the period ****-**** is found with Babybio, which saw its number of users rise by **.**% over the period ****-****.

This statistic highlights the brands preferred by French mothers in the world of baby food products in ****. It shows that over **% of those surveyed cited Blédina products as among their favorites.

This "market duopoly" is also reflected in opinion polls, with the survey below showing that Danone (***) and Nestlé clearly dominate the market. As for children's milk, Blédina's Gallia, Guigiz and Blédilait brands are particularly popular with consumers.

Favored brands in the children's food universe France, ...

3.2 The importance of brand trust

When it comes to food, consumers are particularly attentive to the quality of the products on offer, and to the brand of the product in question. This is particularly the case when food is destined for a fragile segment of the population, such as infants.

As we saw with the events in China in ****, a health scandal can have a lasting impact on the industry. In ****, the Lacatalis company was accused of selling over *,*** tonnes of milk powder,despite the high risk of salmonella contamination. [***] These scandals can destabilize producers, especially when they market their product under a brand name, which was not the case for Lactalis.

According to a survey carried out in ****,food is the sector for which the French are most sensitive to the notion of trust, ahead of high-tech and automobiles.

Share of consumers declaring trust to be paramount when purchasing, by sector France, ****, in % Source: ****

3.3 Production

Source: ****

3.4 Distribution

The distribution of food products is stillvia supermarkets and hypermarkets. In the case of infant milk, this accounts for **% of sales, with the remaining **% sold in pharmacies.pharmacieswhich benefit from a positive "health" signal on the products they sell.

Breakdown of infant milk sales by distribution channel France, ****, in Source: ****

Pharmacy sales are enjoying renewed growth: +*.*% in value and +*.*% in ****. It also remains a key distribution channel for laboratories. The DHA regulation of **** has boosted the market, with a +**.*% increase in sales by value. The ****"Egalim law" on fair remuneration for farmers has also contributed to this favorable environment. In the minds of the French, pharmacies are associated with a local, professional service that enjoys an unrivalled capital of trust.

However, the main competition comes from online parapharmacies, which are increasingly popular with consumers, as they offer a number of advantages:

Attractive prices ; New products and diversity; Accessible at all times. [***]

4.1 Rising prices

The market's oligopolistic structure,product renewal with the rise of organic products, and consumers' concern for quality explain the rising prices and high margins in this market segment. For example, Nestlé nutrition's gross margin stood at **.*% in ****, the highest of all branches). [***]

The prices charged depend to a lesser extent on the distributors, with the Idealo price comparatorthe total cost of food depends on the age of the baby and the diet chosen by the parents. According to the Allo Bébé websitethe cost of baby food is as follows:

Infant milk accounts for around **% of the total baby budget, representing around €** per month (***). *st age milk is the most expensive, costing around €*** for ** cans of *** grams, and continuing until baby is * months old. *nd age milk, which is consumed from the baby's first * months to * year. This also represents ** cans of *** grams (***). Finally, the use of growth milk, which continues until baby's *rd birthday or beyond, means consuming almost ** cans of *** grams for around €***. Babyfood also includes baby food and snacks, which cost an average of €*** per month from the baby's *th month. Dietary diversification generally begins at this point.

Source: ****

4.2 Three main product categories

The products offered on the baby food market can be divided into three categories:

Infant formulas and baby milks: these include infant formulas (***), special milks and growing-up milks. For example: Gallia

Gallia Calisma Relais Lait *er Âge ***g(***) ; Nan Optipro * *er âge Lait Poudre ***g(***); Guigoz Lait *er âge(***).

Infant cereals: Cereals for babies (***). For example: BabyBio

BabyBio * Céréales Nature ***g(***) ; Hipp (***); Bébé Mandorle Ma première céréale, preparation with * cereals ***gr.

Other baby foods: in jars (***), but also in plate dishes containing purée and soup. For example, Holle Petit Pot Boeuf Bio

Holle Petit Pot Boeuf Bio +*m ***g(***); Blédina Mon *er Petit Pot Carotte ***g(***); Smileat Petit pot bébé Potiron zucchini from * months ***g(***).

4.3 New industry trends

While the market is shrinking, mainly in terms of quantities sold, the industry is betting on innovation to create growth in value. The latest trend is vegetarian baby food. In fact, baby nutrition products are tending to follow adult food trends (***), as parents are keen to educate their children in the values they believe in.

Good Goût, for example, offers recipes based on parsnips, rutabaga and Jerusalem artichokes, three vegetables that are all the rage among vegetarian customers who are sensitive to the messages of organic farming. The development of this vegetarian offer corresponds to a premiumization of the market, capable of generating value in a sluggish market.

Source: ****

Manufacturers are also banking on other innovations to diversify their products and move upmarket, such as homemade products.

Source: ****

Two start-ups offer particularly innovative recipes. The first, Good Goût, is positioned in the ultra-premium segment. Its small jars are generally +**% more expensive than the competition. This differentiation is made possible by two assets:

The promise of quality associated with the brand's image (***); The practicality and variety of the products. As well as being ahead of the game with its gourd model, the start-up is innovating by entering the children's plate ...

5.1 A strict sanitary framework

The need to ensure quality food is a major issue for the sector, as it is the primary concern of parent-customers. And the various scandals sometimes tarnish a reputation that manufacturers then try to recuperate. Just recently, Lactalis was accused by several parents of being responsible for cases of salmonellosis following the consumption of milk by their children. [***]

Since ****, the law has required infant milk products to have a certain level of nutrients to meet the needs of young children. The Guigoz brand explains that the law was tightened in **** when the mineral content (***) of *nd age milks was fixed, with minimum and maximum quantities. All health claims, whether therapeutic or preventive, must also be approved by EFSA. [***]

AFPA (***), which presents the AFNOR standard, also describes the main provisions currently regulating the sector:

Infant food must comply with official nutritional recommendations (***) Food safety is strictly controlled: Preservatives, colorants, artificial hormones, sweeteners and artificial flavors are prohibited Few additives are allowed Much lower thresholds for heavy metal content The use of certain phthalates is banned in packaging Certain pesticides are banned on crops

Finally, the DGCCRF (***) also lists all the rules and directives binding manufacturers .

5.2 ISO standards

The baby food market is one of the most regulated, because the products marketed are intended for some of the most vulnerable populations. It is therefore of interest to know which ISO standards are in force, and which nutritional labelling must be carried out in accordance with the Codex Alimentarus.

These are brought together in the SPIFAN project (***) making up these formulas.

Here are just a few of the standards that can be used to guarantee the precise nutritional conformity of formulas:

ISO *****: "Infant formulas and nutritional products for adults - Determination of vitamin C content by (***)" ; ISO *****: "Infant formulae and nutritional products for adults - Determination of vitamin D content by liquid chromatography-mass spectrometry"; ISO *****: "Milk, milk products, infant formulas and nutritional products for adults - Determination of chloride content - Potentiometric titration method"; ISO *****: "Milk, milk products, infant formulas and nutritional products for adults - Determination of mineral and trace element content - Inductively coupled plasma mass spectrometry(***) method" ; ISO *****: "Milk, milk products, infant formulae and nutritional products for adults - Determination of mineral and trace element content - Inductively coupled plasma atomic emission spectrometry (***) method" ; ISO *****: "Infant formulas and nutritional products for adults - Determination of beta-carotene, lycopene ...

6.1 Segmentation

• Nespresso (Nestlé)
• HiPP
• Vitagermine
• Nutriset
• Laboratoires Gilbert (GILBERT Groupe)
• Nutriben (Alter Pharmacia)
• Sodilac (Groupe Savencia)
• Even Groupe
• Sodiaal Groupe (Coopérative)
• General Mills
• Babybio Vitagermine
• Abbott Groupe
• Good Goût (H&M group)
• Blédina (Danone)
• Gerber (Neslé groupe)
• Gallia Laboratoire Bledina
• Guigoz (Nestlé)
• Lemiel (Lactalis Nutrition)
• Materna (Lact'Union)
• Milupa
• Nestlé Nidal
• Picot (Lactalis)
• Potpotam
• Youji
• Nümi
• Nutribio (Sodiaal)
• Reckitt Bencksider France
• Idil Fibres Optiques
• Abott