Baby foods are basically sold through supermarket, grocery stores, mass merchandisers, and some of direct marketing.
The demand in baby food industry is constant. Except United States, there are good opportunities in international markets like European, Asia and South America. Especially in countries with higher income and bigger population.
The declining birth rate in recent years (See Appendix), and the declined consumption of baby food per capita contribute to a decrease of domestic volume sales. The overall baby food industry decreased about 7% in 1997 fiscal year.
Baby food industry is facing an increasing requirement for quality products and innovation. There are several government regulations for the standards of pesticide and other ingredients. Buyers tend to be very sensitive to suitable feeding nutrition and other contents, such as sugar, salt, modified food starches, etc. Gerber?s extensive consumer research shows that a growing number of parents prefer baby foods without added starches and sugar.
Compare to other similar foods, baby food is higher priced. Pricing and promotion are very important methods employed by firms in this industry. Gerber and Beech-Nut all have an aggressive expense in promotion campaign. Due to declining of birth rate and at the same time extensive international opportunities, the competition in this industry is becoming increasingly intense.
Gerber dominates the industry for several decades with a market shares of about 70% presently. Beech-Nut is the second largest manufacture which takes about 15%. Other smaller companies like H. J. Heinz takes the rest 15%.
“5 forces” Analysis