BABY, IT'S YOU

PEGGY BRESNICK KENDLER

As long as there are babies born, there will be strong demand for baby food. However, in order to retain their dominant share of the category, retailers need to think creatively when merchandising the product.

There is a trick to displaying baby food properly, according to Steve Colton, Gerber's director of marketing, baby food. "What we've found is that moms like to shop with more of a shopping mall concept, where you have anchor stores on each end and the higher-margin and more boutique-type products in between.

"We recommend that retailers do a similar thing in the baby aisle, with baby food as one end-aisle destination and diapers on the other end. They act as anchor stores, and in between, you can have the other areas, including formula, care products, lotions, etc."

David Puhan, category manager at Brown & Cole, Bellingham, Wash., said each store displays baby food products differently. "We have 35 stores and probably 32 different ways of displaying baby food. Typically, the baby food is either displayed along the same run as other baby products. Some stores aren't that way, but it's our preference," he told SN.

Puhan said manufacturers could make his job easier and increase sales by lowering the cost of baby food. "We sell it at a 30% to 40% loss every day," Puhan noted. "We look at baby food as a necessary evil. At least in this market, grocers price it in a range that isn't profitable and it's been a loss leader as long as I can remember. We're just trying to hook mom into doing her shopping with us."

Keith Joubert, senior buyer at Church Point Wholesale, Church Point, La., suggested that manufacturers limit the number of jars in each case, from a 24-pack case to a 12-pack case.

"Some of the smaller and independent supermarkets would be able to carry more stockkeeping units than they can carry now," Joubert said. "Gerber, for instance, offers just about every flavor under the sun and it's hard for retailers to put 24 jars of each variety on their shelves, when there are about 80 different types."

Meanwhile, manufacturers will continue to improve the quality of jarred foods while introducing products to extend the baby-food-buying period through the toddler years.

Sal Stazzone, vice president of marketing for Milnot Co., which owns Beech-Nut Nutrition Corp., noted that the birth rate has increased about 1.5%. But that rise doesn't necessarily translate into a jump in baby food sales.

"Some of the continuing trends include a continued desire on the part of moms to breast feed, and breast feed longer, often putting off the decision to begin feeding baby food until the baby is nine months old," Stazzone said.

Even so, statistics from ACNielsen, Schaumburg, Ill. show that the lion's share of the total baby food business is in grocery stores and supermarkets, with supermarket sales representing $3.3 billion for the 52 weeks ending April 15, 2000, or about 84% of all sales in this category.

Minot Co.'s Stazzone believes there has been a shift in sales attributed to supermarkets. "Grocery stores used to see about 92% to 93% of all baby food sales," Stazzone noted. "That has started to shift with the emergence of Wal-Mart's Supercenters. We're now seeing about 88% of all baby food being bought in grocery stores and the other 12% or so being purchased in nontraditional environments."

Private-label baby food has begun to appear in supermarkets across the country. The size of the private-label or generic baby food market is very small, but it does exist. According to Dane Twining, an official for the Private Label Manufacturers Association, New York, N.Y., private-label baby food currently has a zero percent market share. "But if one very large chain introduced store-brand baby food, it would show up as an appreciable amount," Twining said.

ACNielsen has tracked a tremendous growth in private-label baby food over the past two years, although the category still represents only eight-tenths of 1% of the total market. ACNielsen includes baby cereal and biscuits; strained, junior and instant baby food; baby juice; baby milk and milk flavoring.

Two years ago, for the 52 week period ending April 18, 1998, ACNielsen indicated total private-label baby food rang up $2.9 million in sales at all outlets, including sales from grocery, drug stores and mass merchandisers. For the same period of 1999, store-brand baby food sales jumped 408% to $14.9 million. Most recently, in the 52 weeks ending April 15, 2000, private-label baby food sales jumped another 107% to a total of $30.9 million in the United States.

Julie Cary, director of marketing for Gerber's Graduates, said generics are something to be aware of in any category. "Retailers support private-label products and are very interested in store-brand opportunities," she said. "But we feel that private-label baby foods won't make the inroads that private label has made in other categories. Moms want to go with a name brand that they know and trust."

Gerber has decided to leverage the public's trust in its foods into a line of baby care products. The Gerber Wellness Line, with lotion, oil, baby wash, diaper rash lotion and other baby care products, was launched in early March. Although it's too soon to tell if it is driving the baby food business, Gerber is confident that the Wellness Line will sell well. Although there hasn't been much growth in the organic baby food market as a whole, one company that offers a frozen baby food product has been successful. The Well Fed Baby, Inc., San Diego, offers a line of all-natural, soy-based baby foods that are both organic and kosher. The entree products are frozen and can be prepared in two minutes in a microwave.

O. Robin Sweet, author of The Well Fed Baby Cookbook, started the company nearly two years ago in natural food stores. "The response was phenomenal and we went nationwide within six months," Sweet said. "Consumers are looking for something different for their children."

The firm's entree products are complete meals with soy milk or tofu as the base and are 100% organic and kosher. Among the entree offerings are brown rice and lentil, banana mango congee, baby carrots and green beans, legumes and lentils and millet and mango. The firm also offers an all-natural grape-flavored freezer pop that contains a daily dose of multivitamins, and a line of natural liquid vitamins for kids.

In the past year, The Well Fed Baby products have appeared in grocery stores across the country. Albertson's launched the Well Fed Baby product into its supermarkets, Target Superstores picked up the entire product line, and Publix now sells the products in 300 of its stores that have natural food sections.

"The grocery stores love us because in many places, jarred baby food is a loss leader. With ours, they make a 35% margin," Sweet said.

There continues to be other news in baby food, such as Mead Johnson Nutritionals' entry into the category. Known for its Enfamil line of infant formula but not known until recently for baby foods, the company offers cereal with formula, so all that's needed is water instead of having to add formula to the dry cereal. The company has also entered into the toddler area, with the introduction of foods for older children skipping into the main jarred baby food area.

Mead Johnson Nutritionals' EnfaGrow line includes Cracker Bites and Cookie Bars and Nutritional Oatmeal and Milk Flavorings. The line was developed to ensure that toddlers get the vitamins and nutrients they need with foods that have been designed just for them.

Gerber has also been concentrating on toddler introductions, with the launch of Cereal Snackin' Squares, Fruit & Cereal Bars and Juicy Smoothy products that augment the firm's Graduates product line for toddlers. Cereal Snackin' Squares are bite-sized snacks designed to be easy for children to grasp, Fruit & Cereal Bars are individually wrapped snack bars and Juicy Smoothy is a juice and dairy product found in the baby food aisle. These products began shipping in October 1999.

According to Gerber's Cary, the total category is up in the Graduates line and experiencing double-digit growth. "We also have new packaging that includes developmental icons, to give parents a clue as to the developmental appropriateness of each food for their toddlers," Cary said. Gerber also has a new advertising campaign, "The Right Foods at the Right Time," which focuses on the fact that the Graduates products' texture, size, shape and nutrition are formulated specifically for young children. Each of the products contains vitamins and minerals including calcium, iron and zinc.

Another piece of news that will affect the baby food category is the merger of Heinz and Beechnut. The Beech-Nut brand is sold on the East and West Coasts, and in some Midwest markets, while Heinz has been sold everywhere else. "We might see one or the other emerge as a national brand," Milnot's Stazzone projected.