A MORE WHOLESOME STRAIN

AMITY K. MOORE Additional reporting: BOB BAUER

Adult concerns about healthier eating have come of age in the baby food category. Fruits and vegetables, and to a lesser extent organic baby food, are the category's growing segments, retailers told SN.

"I see a trend toward organic and more natural-type products," said Keith Joubert, assistant purchasing manager at Church Point Wholesale Grocery Co., Church Point, La. "Vegetables and juices are doing very well," he added.

"This is one area where you wouldn't expect to see much of a healthy trend," said a buyer with a Mid-Atlantic chain. "When it comes to babies, most people want only the best. That's the way it's been forever.

"But somehow, the vegetables and fruits seem to be doing a little better, while things like desserts are off somewhat."

The buyer said the publicity alerting consumers of "healthier" brands of baby foods has had some impact on the category, but not as much as it would in other areas.

"People grew up eating one kind of baby food, whether it was Gerber, Beech-Nut, Heinz or whatever. They figure that if they turned out OK, it should be OK for their baby. Maybe they're offsetting that a little bit by having their kids eat more fruits and vegetables."

David Duran, a store-level associate with Fairway Market, Visalia, Calif., said consumers in his store are also buying more fruit, particularly applesauce and bananas.

Grocers said the acquisition of Earth's Best, the manufacturer of organic baby food based in Boulder, Colo., by H.J. Heinz, Pittsburgh, could help the healthy segment of the category.

"I'm sure Heinz has more money to do promotion than Earth's Best did," said the Mid-Atlantic retailer. "That should help Earth's Best's share continue to grow. It takes a long time to change people's habits. I'm sure Heinz is in it for the long haul."

For those like Al Young, grocery category manager at Big Y Foods, Springfield, Mass., the boost from Heinz is needed if organic baby food is going to catch on.

"Organic baby food is not doing well at all. The Earth's Best brand has a following, but [it] can't seem to grow the category to the next level," he said. The purchase of Earth's Best vaults Heinz into the No. 2 slot in the strained baby food category. Gerber, Fremont, Mich., still controls the lion's share of the business, with a 64% share for the year ended Dec. 9, 1995, according to A.C. Nielsen, Schaumburg, Ill. That share, however, is down 4% from the prior year.

Beech-Nut Nutrition, St. Louis, ranked second with a 16.9% market share. However, when numbers from Heinz and Earth's Best are combined, Heinz's share totals 18.5%.

Though Gerber's overall market share is down, one retailer cited sales of Gerber's Graduates baby food line as growing, indicating a trend toward baby food for toddlers.

"[Gerber Graduates] keep the child on baby food a little longer than before, [because] it is for children between baby food and regular food," added Big Y's Young. "[This line] is showing signs of growth."

Nielsen's statistics show the Graduates line up 18% to $58.6 million.

Other manufacturers are not sitting back and watching. A source at a West Coast independent reported aggressive marketing by Heinz and other manufacturers, and also a "strong push on the West Coast to reintroduce Beech-Nut."

Enticing parents into the store after the child has grown out of baby food remains a challenge for supermarket retailers.

"Variety is the winning factor," said Young of Big Y. "Pricing must be correct for them to make a purchase," he added.

Fairway's Duran said it's very important to make a good impression on young parents quickly, "so they come back and buy food again."

He said he ensures the baby food section is "fresh and rotated -- that nothing is too close to [being] out of date. I keep [our shoppers] happy, and bring in the product they want."

Duran said Fairway competes with other stores by carrying a lot of variety and by pricing its baby food category competitively. He said Fairway devotes about 20 feet to the baby food category. Better prices and variety are the methods another West Coast independent uses, said a source there. "[Price] is very important. That's why the whole industry has aggressively retailed baby food historically at a loss," he said.

"We're a price-impact store, so we just focus on [our] price being cheaper than anybody else [including mass merchandisers]. We also have a very good variety of baby food," the source added.

Some retailers use hot prices on other products in the baby aisle to attract shoppers to their stores -- and ultimately to their baby food sections.

"[We] try to promote baby food and diapers as much as we can because we want the young shopper in the store," said Steve DiGeronimo, grocery merchandiser at Victory Super Markets, Leominster, Mass. "We do a lot of promotions, mostly on diapers, to get the shoppers in [the aisle] to buy the other baby needs -- to get those young shoppers in the store," DiGeronimo said.

Alternate store formats are a threat to his chain's baby category sales, DiGeronimo added. "Everyone's getting their share; you've got Wal-Mart, department stores, drug stores. We compete through promotions. We put [our baby products] on sale as much as we can," he said.

"We use not only baby food, but formula and diapers and everything," said David Renaldi, director of merchandising at Martin's Super Markets, South Bend, Ind., when asked what his chain does to draw young parents to its stores. "We keep our prices extremely low and run very hot ads. We figure if we can get the young customer when the kids are babies, then hopefully we can hold on to that family as customers for several years," he said.

"[We promote] within the whole category probably weekly with something -- diapers or something. [For] baby food, it's maybe once a month. Price is very important and very competitive," said Renaldi.

"Mass merchandisers are not so much of a problem in baby food. Where we have our biggest problem with [them] is in the diapers area, somewhat in formula," he added. Joubert of Church Point Wholesale also cited the competition from mass merchandisers.

"[Price] is very important in the market we're in because we have competition such as Wal-Mart [supercenters], Super Kmart -- places like that," he said.

To help retailers battle back against their competition, Church Point offers its customers some money-saving programs, Joubert said.

"We offer off-invoice allowances and billbacks, which are passed on to the customer if they agree to lower their suggested retails," he said.

"For instance, if a customer buys one case of, say, Gerber apple juice, [they] automatically get $1 per case. We use a term called 'SPA' -- special performance allowance. If they buy 10 cases of assorted juice items, or if they lower their retail by 10 cents per jar, then they qualify for an extra 50 cents off per case," Joubert explained.