A recent report released by Canadean revealed that even though Malaysian parents did not really increase the volume of baby food, the overall value has increased by over 60% over the last few years.
This is due to rising incomes, a decline in births and the trend towards super-premium and specialised baby food.
In Malaysia, the baby food market has been stable, with the volume only growing marginally. In 2014, Malaysians bought 33,413 tonnes of baby food, representing a growth of 3.6% from 2008. However, in value terms, baby food increased by over 60%, reaching US$443 million (RM1.6 billion) in 2014.
Some of the multinational brands that dominated the baby food market in the country are Danone, Nestle and Dutch Lady – which together accounted for 75% of baby food sales by volume in 2014.
In the same year, around 29,375 tonnes of baby milk were consumed, accounting for 90% of the market value.
According to the same report, birth rates have declined by 4% between 2011 and 2014 and this trend is set to continue and declined by a further 7.6% by 2020. As a result, the number of infants will be lower, while the number of toddlers aged between one and three will increase.
“This change will have a significant effect on the market as a whole, with specialised and follow-on milks increasing their market share in the next couple of years. Moreover, milks suppliers are likely to focus on products for older children, and try to expand into the 3+ and 6+ years markets,” said Sam Allen, an analyst at Canadean.
Canadean also found that commercial baby food makes up part of the food budget for families with small children. Furthermore, it is one of the food categories least affected by the economy. Parents also tend to be loyal to certain baby food brands.
Half of the families with babies surveyed said they would not change their usual purchasing habits, and only 4% said they would buy less baby food because of food inflation or income problems.
Based on the same report by Canadean, with the disposable incomes increasing in Malaysia, parents would most likely buy more baby food in coming years. However, the declining birth rate in the country will definitely have an adverse impact on the market.
“Most value growth will occur as a result of higher prices and the trend towards more premium products, including super-premium and more specialised milks,” added Allen.
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