Socially conscious small brands are giving market leaders a serious run for their money

How’s this for an unexpected new direction? Nineties pop icon Emma Bunton, aka Baby Spice, is vying to become top of the tots with socially-conscious eco-brand Kit & Kin (tagline: Protecting the world naturally). It’s one of the fastest-growing baby brands on the market, having tripled its supermarket nappy sales to £1.1m in the past year. It’s one of a new wave of challenger brands in infant care that are taking on the big names with specific claims on sustainability, nutrition and even dermatological needs. While the likes of Pampers, Aptamil and Heinz are suffering, smaller names such as Kit & Kin, Childs Farm and Piccolo are making massive gains in sales and shelf space.

Their sales are still small - Kit & Kin, for example, is dwarfed by the £183.4m made by Pampers - but they are undoubtedly capturing the imagination of consumers. So, can small brands spice up babycare? If so, how can the market leaders stay relevant?

The big players largely blame market conditions for their decline. “The UK birth rate fell to a record low in 2018, which means all market players have needed to adjust their growth mindset,” says Antony Lorman, commercial director at Danone Specialised Nutrition, whose brands include Aptamil and Cow & Gate.

“Simply put, there were fewer babies to feed than the year before. There has also been intense pricing pressure, with cheaper own brands becoming more readily available.”

That may not be the entire reason behind the performance of Aptamil, which shed a staggering £54m last year [Nielsen 52 w/e 7 September 2019]. But Lorman does have a point on the tough market. The past year has seen £22m wiped off the babycare category [Kantar 52 w/e 6 October 2019]. Volumes have fallen 2.1%, equating to 15 million fewer packs. People simply aren’t buying as much.

“Parents are often very aware of the environmental impact of bringing a child into the world and want to ensure their future is protected”

All of which makes the rise of the challenger brands more impressive. Vegan ‘no nasties’ nappy brand Rascal & Friends has gone from virtually non-existent sales to rack up £1.4m in the past year. The Kiddylicious snack range is up 25.8% to £25.1m. And Childs Farm founder Joanna Jensen says its growth is giving J&J a run for its money.

What’s more, shoppers are willing to pay more for these propositions. Average price per pack is up 0.5% across the market, which Kantar analyst Hanna Ulstein says is “partly driven by the movement towards premiumisation and the growth of new niche brands”.

It turns out that shoppers are prepared to shell out for benefits that mass market products don’t offer. Bunton’s Kit & Kin is a case in point. It’s been fetching an average of 21p a nappy in Boots, Ocado and Tesco, versus a market average of 14p and just 5p for Tesco’s Fred & Flo offering [Nielsen].

“Our growth is reflective of a welcome shift in the market as a whole, as customers switch to eco-friendly alternatives,” says Kit & Kin MD Christopher Money. “This is particularly the case with the baby market as parents are often very aware of the environmental impact of bringing a child into the world and want to ensure their future is protected.”

In keeping with that ethos, Bunton’s brand uses sustainably sourced, plant-based materials in its nappies and wipes and ‘gives back’ through the Kit & Kin Foundation, which supports a range of environmental and community projects in Guatemala. Customers are also encouraged to sign up to the brand’s subscription service to have their nappies delivered to their door, and for every 10 nappy subscriptions, the brand buys one acre of rainforest through the World Land Trust.

Price wars: the winners and losers in infant care brands

Top 5 fastest growing brands  
         
      Value (£m) % growth
  COW & GATE Cow & Gate 117.3 9.0
  HIPP ORGANIC Hipp Organic 19.1 60.0
  KIDDYLICIOUS Kiddylicious 25.1 25.8
  SMA SMA 55.5 7.7
  ELLA’S KITCHEN Ella’s Kitchen 9.9 50.9
         
         
         
Top 5 fastest falling brands      
      Value (£m) % growth
  APTAMIL Aptamil 166.1 -24.4
  PAMPERS Pampers 183.4 -6.1
  ELLA’S KITCHEN Ella’s Kitchen 61.6 -6.8
  HEINZ Heinz 22.7 -13.0
  COW & GATE Cow & Gate 38.6 -7.2
         
         
Source: Nielsen 52 w/e 7 September 2019  

 

  • Ella’s Kitchen, Hipp Organic and Cow & Gate all feature among both the fastest-growing and fastest-falling brands – albeit across different categories.
  • Cow & Gate’s baby milk is the fastest-growing of the top 10, with value sales up an impressive 24.9% on volumes up 10.9% – making it a winner in baby milk’s intense price war. The brand’s first infant milk undercuts both Aptamil and Hipp Organic’s equivalent offers at just £8 for 800g, while the most expensive, sister brand Aptamil, is the fastest-falling of the top 10.
  • Conversely, Cow & Gate’s babyfood ranks in the fastest falling brands alongside Ella’s Kitchen, Heinz and Hipp – all victims of parents’ desire for fresh, clean meal solutions as opposed to heat-treated pouches and jars. “Increased focus on health means that brands need to call out their health credentials successfully to consumers just to stand still,” says Nielsen babyfood analyst Stephen Bough.
  • Pouch pioneer Ella’s Kitchen is suffering from those effects. Its meals are down 6.8%. But the brand is cashing in on the rise of snacks, where it’s up 50.9%.
  • In nappies, Pampers is the second fastest-falling baby brand, with value sales of its core products down 6.1% on volumes down 8.7%, as sustainable alternatives by the likes of Rascal & Friends and Kit & Kin win eco-conscious shoppers.

 

Point of difference

And it’s not just environmental and social values that are valued by parents. They are increasingly on the lookout for compelling points of difference against the big brands. In the case of toiletries, that means products that are positioned as being milder or soothing for sensitive or eczema-prone skin.

See the growth of ‘paediatrician tested’ Aveeno Active Naturals and Childs Farm, the latter of which has delivered a 29.5% growth in value on volumes up 30% [Nielsen]. That figure is all the more impressive considering the baby toiletries category suffered the greatest loss of the year, according to Kantar’s read of the market.

Childs Farm attributes much of its success to a brand partnership with parenting influencer Giovanna Fletcher. The content focuses on showing the real side to parenting rather than the “sickly ads showing clean, happy and well-rested families”, says Jensen. “Our brand purpose is rooted in inspiring trust through honesty.”

In infant food, there is a similar need for a point of difference. That much is borne out by the performance of major players Ella’s Kitchen, Heinz and Cow & Gate, which shed a combined £10.8m (see above). Instead, parents are gravitating towards brands that trade heavily on natural credentials. Piccolo, up 14.1% to £2.4m, is a case in point. Organic credentials and health are key to its proposition.

For the ultimate wholesome solution, Piccolo launched a complete ‘cooking’ solution last summer, with organic stock cubes, stir-in sauces and pasta developed for babies aged six months and up and suitable for the whole family. Given that 85% of parents now cook meals at home for their tots [Mintel], it may prove a savvy move.

“Our cooking range has opened up a new need-state for parents who want to cook at home for their children but have struggled to find products that offer the nutritionals appropriate for babies,” says Piccolo founder Catherine Gazzoli. “Our stock cubes are the first very low-salt, no-sugar, palm oil-free stock cubes on the market and so have become a favourite for being both sustainable and nutritionally suitable for baby.”

Meanwhile, toddler meal brand Little Dish is hoping to earn both sustainability and health points with its new vegan range. “In September we launched the UK’s first plant-based fresh toddler meals in response to parents asking us to make completely plant-based recipes for their little foodies,” says MD Shonagh Primrose. “Both meals contain two of a toddler’s 5 a day, and are packed with exciting tastes and textures for little ones to explore.” The brand is already gaining distribution, having won shelf space in Sainsbury’s after the retailer axed its rival own label Little Ones ready meals.

“Success is about meeting a consumer need and adapting to the evolving wants of shoppers”

Kefir brand Biotiful, which launched its own drink for kids in autumn, believes there is plenty of opportunity in natural, healthy fare. “Success is about meeting a consumer need and adapting to the evolving wants of shoppers,” says founder Natasha Bowes. “Parents are looking for foods that deliver on superior nutrition, natural ingredients and convenient formats at a price that can work with their regular shop.”

The convenience point is crucial. Because children’s snacking is a growing area, up 5.5% to £86.8m [Nielsen]. And in this arena, many of the principles driving growth in the food market - natural cues and health credentials - have a similar power.

Take up-and-coming brand Mia & Ben, whose “natural and 100% organic” fresh snacking pouches launched across 297 Sainsbury’s stores and online in January, as part of the retailer’s Future Brands scheme. “Kids’ snacks are moving towards more natural and convenient choices,” says Raymond Downie, senior buyer at Sainsbury’s. “With their fresh 100% organic fruit & veg, Mia & Ben was the right choice for us.”

Ella’s Kitchen, meanwhile, has seen sales of its baby snacks jump by more than a half, thanks to healthy snacks such as Melty Sticks. Then there’s Kiddylicious, which has grown sales by more than a quarter thanks to the success of launches including veggie straws, coconut rolls and houmous dipping pots (see left). “Innovation is key as mums are constantly on the lookout for new things in this category,” says head of category & insight Rob Fife. “They want to see adult trends made suitable for younger ones.”

Healthy snacking is inspiring thinking at the giants, too. Nestlé has launched Cerelac Farmer’s Selection Organic Cereal Snacks, which contain no artificial preservatives, flavours or colours, for example.

New challengers: infant care sector performance

Top eight infant care sector performance  
       
  Value (£m) % growth Market share
Nappies 366.1 0.7 25.2
Baby Milk 328.2 1.5 22.6
Baby Food 289.8 -1.5 20
Baby Healthcare 94.4 1.2 6.5
Baby Wipes 143.7 -4.5 9.9
Baby Toiletries 102.2 -14.8 7
Cotton Wool 34.2 5.9 2.4
Baby Oral Care 11.9 -3.7 0.8
       
       
Brands vs Own Label      
  Value (£m) % growth  
Brands 1,105.70 -3.3  
Own Label 346 4.7  
       
       
Source: Kantar 52 w/e 6 October 2019    
  • At a total level, branded sales are down £37.4m. But that is mainly being felt by mainstream brands, who are being outshone by younger challengers. Plus, they’re being undercut on price by own-label offers. See the huge declines of Pampers, Aptamil and Ella’s Kitchen food pouches for proof.
  • Meanwhile, pricier toiletries brands such as Childs Farm and Aveeno and snacking players like Kiddylicious are on the up.
  • Own label is having a growth spurt, up 4.7% in value with pack sales up 6%. “Aldi, which has a strong private label heritage, continues to see strong growth from its own label line Mamia,” says Kantar analyst Hanna Ulstein. “Other important baby retailers such as Asda and Tesco see growth from own label exclusively, with the latter launching its range Fred & Flo in 2019.”
  • In fact, Aldi and Lidl are the fastest growing retailers in the category, with the latter’s sales up more than a fifth following expansion of its Lupilu range.
  • “Own label will continue to challenge brands with increased presence in new segments in which it is under-represented,” predicts Ulstein.

Own label

Such innovation will be crucial as own label gains ground. Not only are the discounters continuing to back their babycare offerings with primetime TV ads, but the big four are bolstering their own-label offerings. Both Sainsbury’s and Tesco launched new ranges in 2019, helping to drive £15.5m in own label infant care lines. Brands, meanwhile, have lost £37.4m overall [Kantar].

Much of own label’s success is down to the way retailers have positioned their offerings as brands in their own right, says Jo Agnew, marketing director at Urban Fresh Foods, which owns kids’ fruit snacking brand Bear. “Category research shows that 73% of parents no longer see own-label babyfood products as being inferior to branded equivalents,” says Agnew. “We’ve seen an influx of own-label introductions driving growth.”

“We can expect to see brands capitalising on sustainability trends in their baby ranges”

So brands will have to make sure they are continually offering new points of difference. Kantar’s Ulstein believes there is more mileage in eco-friendly and natural propositions. “Considering consumers’ movement towards sustainability, and the natural trend that is having a strong impact on the wider health and beauty market, we can expect to see more brands capitalising on these trends to expand their baby ranges in the near future,” she says. “Doing so effectively will allow brands to differentiate themselves from own label and command a price premium.”

Organix, which has pledged to make its packaging 100% recyclable by 2023, similarly believes there is more work to do on the environmental front. “As we move into a new decade, with some pretty challenging global issues, customers want the reassurance that they’re buying from brands and companies that do care, and are doing their bit,” says MD Philipp von Jagow.

It’s the little ones who will inherit the planet, after all.

Innovations in food and drink for infants 2020

 

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