Spotlight On: Beech-Nut Nutrition Co.

Beech-Nut is using a grass-roots, “scrappy” model intended to make clear to consumers what the company and its products are about.

Sometimes it is good to be number two in a category. It really does make you try harder.

Just ask officials at the Beech-Nut Nutrition Co., who for years have tried to gain a larger share of the lucrative baby food business away from a much larger, better-known and better-financed competitor.

Despite being in business since 1891, the battle has not always gone in Beech-Nut’s favor, with the company currently controlling less than a double-digit share (8.7% according to IRI) of sales in the nearly $1.6 billion category while Nestle Gerber (66.2% share) has dominated sales in the industry, not to mention the direction of innovation and new products.

But now, the Amsterdam, N.Y.-based company is confident that its new strategy, one that emphasizes quality, variety, innovation and a big emphasis on unique ingredients, will catch discerning consumers’ eyes and interests and give them a choice between products.

Baby food remains a stalwart of the supermarket despite a steady decline in sales over the last decade. Carrying strong margins and still a huge market, the category has produced enormous profits for retailers over the years. In addition, as parents start new families, a well-developed baby section—including food, formula, diapers and supplies—can only help a retailer differentiate itself from the competition.

Suppliers have not missed a beat either, with all the major players aggressively introducing items to the marketplace to grab the consumer’s attention and, in the end, more market share. To be certain, Beech-Nut has a long way to go to win the baby food wars. But there is little doubt that this is a company that is trying all it can to make a difference in the segment.

“The first step of this journey is to be consumer-led,” says Jodi Breuer, marketing director at Beech-Nut. “We are finding out what the consumer wants and delivering on it. We should be able to move faster and bring a compelling differentiation to the category.”

Noting that many moms have left the segment in favor of making their own homemade baby foods, Breuer says that part of Beech-Nut’s mission is to draw these shoppers back to the market—and specifically Beech-Nut’s products. “A shift has taken place where the consumer is much more interested in more natural products,” she says. “They want product that is closer to the original state.”

So privately-held Beech-Nut is pushing a marketing strategy that stresses the quality of its product under the tagline, “This is not baby food; This is real food for babies.” The company is aggressively stressing that its food is the equivalent to homemade.

“At the end of the day, our goal is to bring the most nutritious foods to moms for their babies,” notes Andy Dahlen, vice president of marketing and sales. “The needs of Millennial moms are quite different than previous generations. These moms really want to know what is in the jar and where the ingredients came from.”

Trading on tradition

Beech-Nut officials pride themselves on the company’s long history. It started as a producer of ham, bacon and sliced dried beef, before moving into the production of such products as grape jam, peanut butter and baked beans early in the 20th Century. Baby food came along in 1931 when the company introduced 13 baby foods in glass jars.

Company officials are also proud of the fact that Beech-Nut was the first company to introduce a number of things to the baby food category. They say the company was the first to use a vacuum-sealed jar and the first to remove salt and starches from baby foods. The company was also the first to introduce age-specific varieties in line with the American Academy of Pediatrics with its Beech-Nut Stages brand, officials add. 

Right now, Beech-Nut offers about 120 SKUs, all produced at a 650,000- square-foot factory opened in Amsterdam, N.Y. in 2010. Its newest line features 46 SKUS, including such flavors as just apple & kale, just carrot, sweet corn & garbanzo bean, just apple & red bean and just corn, kale & spinach. The products are being sold in a transparent jar.

“We want moms to see the colors and textures of the products,” notes Dahlen. “At the same time we are trying to show retailers and consumers that we are the ones brining innovation to the baby food category now.”

Getting the message out is part of the battle; one that Beech-Nut officials realize is an uphill climb.

“We can’t outspend our competition but we can still get the word out using a grass-roots, scrappy model that makes it clear to consumers what we are about and what our products are about,” says Breuer. “We are standing by our solid principles and the ingredients in our foods.” That said, Beech-Nut plans to support its products in-store with FSIs, customized shipper displays and shelf talkers. The company is also advertising in the appropriate parenting magazines as well as People.

“We have a great story to tell,” says Dahlen. “Beech-Nut is no longer a me-too baby food company. To the contrary, we are putting together a unique combination of competencies and capabilities that are positioning us to understand the consumer better and deliver innovative products faster.”