Pulse Report Baby Q3 2013

PULSE REPORT

IRI Pulse Report Baby

Welcome to the Pulse Q3 2013 edition for baby. We hope you find it

useful. Please do not hesitate to contact us if you have any questions

or comments at [email protected].

Q3 2013

IRIworldwide.eu

PULSE REPORT

About the Report

2

• This Baby report is one of 10 super category reports designed to show high-level

comparison and analysis for retail markets across major countries in Europe.

• This report contains data gathered from across Europe. This market was split into the

following categories: baby food, baby milks and drinks, nappies and baby toiletries.

• The report highlights key metrics, such as total sales figures, market trends, category

share, and winners and losers for Europe and for individual countries.

• The data has been sourced from IRI retail databases and Eurostat—the statistical branch of

administration for the European Commission.

• The countries included in the report are: France, Germany, Italy, the Netherlands, Spain

and the United Kingdom (UK).

• The market channels used for each country in this report are as follows:

Country Channels used

UK Hypermarkets, supermarkets, drugstores and impulse outlets

ESHypermarkets, supermarkets, hard discounters and drugstores including the Canary Islands

DE Hypermarkets, supermarkets, hard discounters and drugstores

NL Hypermarkets, supermarkets, hard discounters and drugstores

ITHypermarkets, supermarkets, small self service, hard discounters and drugstores

FRHypermarkets and supermarkets

• For analytical purposes the data sourced from available retail databases has been

consolidated to provide consistent results. However, for some countries it has not been

possible to source data pertaining to certain categories. Where this occurs, it has been

documented in the Notes section found at the end of the report.

PULSE REPORT

On the Radar

3

ECONOMIC FIGURES INFLUENCING CONSUMER BEHAVIOR

Source: Eurostat, September 2013

Sales declined across the baby universe (-1%) during the last year, except the UK. Milk and drinks performed relatively well in all countries, while baby food did not show positive growth in any countries. Only UK boosts sales.

POPULATION IN MILLIONS

UNEMPLOYMENT (%)

AVERAGE 12 MONTH

INFLATION RATES GDP IN MILLIONS (€)

CRUDE BIRTH RATE PER 1000

INHABITANTS

Jan. 2012

Jan.2013

Sep. 2013

Avg2012

Sep. 2013

Average 2012 2012

2013 (Estimate) 2011 2012

France 65.3 65.6 11.1 10.2 +1.2 +2.5 2 032 297 2 059 358 12.6 12.6

Germany 80.3 80.5 5.2 5.5 +1.8 +2.4 2 644 200 2 694 499 8.1 8.4

Italy 59.3 59.6 12.5 10.7 +1.8 +3.5 1 565 916 1 568 388 9.0 9.0

Netherlands 16.7 16.8 7.0 5.3 +3.1 +2.8 600 638 604 459 10.8 10.5

Spain 46.8 46.7 26.6 25.0 +2.3 +2.3 1 049 525 1 051 076 10.1 9.7

United Kingdom 63.4 63.8 7.5 7.9 +2.7 +3.7 1 901 001 1 854 920 12.8 12.8

PULSE REPORT

416 419 405 421 420 418

167 168 157 163 159 155

117 113 113 120 128 117

260 254 246 250 246 241

342 327 335349 353 338

479 483 457468 455 459

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

01-juil.-12 01-oct.-12 30-déc.-12 31-mars-13 30-juin-13 29-sept.-13

Mil

lio

ns

Period Ending

France

Germany

Italy

Netherlands

Spain

UK

GLOBAL TRENDS

4

-5.3%

+2.6%

+2.2%

TOTAL EUROPE -1.4%

VALUE SALES IN MILLIONS (€)

Total EU 6 972

FR 1 840

UK 1 664*

DE 1 375

IT 982

ES 634

NL 478

TOTAL BABY VALUE SALES AND GROWTH AND DECLINE IN THE LAST YEAR

*based on an exchange rate of €1.150 to the pound

-4.9%

-5.3%

+4.5%

TOTAL BABY VALUE SALES FOR THE LAST SIX QUARTERS

Source: IRI retail databases; Period ending 29 September 2013

PULSE REPORT

2 866

1 4531 607

1 045

6.4-2.3 -5.0 -3.2

Nappies Baby Milk

and Drinks

Baby Food Baby

Toiletries

Million

s

Total € Sales % € vs. YA

41,1%

23,1%

20,8%

15,0%

Nappies Baby Milk and Drinks Baby Food Baby Toiletries

Europe

5

1 6071 453

1 045

2 866

Eu

ros,

in M

illi

on

s

CATEGORY VALUE SALES IN THE LAST YEAR

CATEGORY SHARE OF VALUE IN THE LAST YEAR

Europe includes: France, Germany, Italy, Netherlands, Spain and United Kingdom

TOP 5 CATEGORIES: EVOLUTION

Value sales (€) and % change vs. year ago


KEY TRENDS

• Most baby categories experienced

declining sales in Q3 2013 across all

countries.

• The UK, Germany and the Netherlands

either maintained or slightly increased

sales, driven only by the performance of

baby milk, which was sustained by the

export to China.

• France, Italy and Spain saw value sales

decrease by 5% versus last year.

PULSE REPORT

Europe

6

CATEGORY INSIGHTS

• The baby milk and drinks category performed best for the quarter, driven by increased sales

in the Netherlands (+42%), UK (+10%) and Germany (+10%). Category growth is mainly

driven by the fear of the quality of China's milk and the exports of milk.

• Baby food is the category with the greatest sales declines, decreasing in all countries with a

global decrease of 5.0%. Only the UK maintained positive traction for the quarter (+0.9%).

France (-8.0%), Spain (-7.6%) and Italy (-6.4) experienced the sharpest declines.

• Nappies represents 41% of total baby category sales. However it is declining in each country,

with the Netherlands seeing the sharpest value decline (-9.0%).

• Baby toiletries continues to decline, loosing 24.1 million euros. Declines in Italy were a

standout, at -6%.

Europe includes: France, Germany, Italy, Netherlands, Spain and United Kingdom


TOP LOSERS: VALUE SALES CHANGE VS. YR. AGO (€)

TOP WINNERS: VALUE SALES CHANGE VS. YR. AGO (€)

97.2

0 20 40 60 80 100 120

Baby Milkand Drinks

- 24.1

- 94.3

- 77.0

-100 -80 -60 -40 -20 0

BabyToiletries

Baby Food

Nappies

.Millions Millions

PULSE REPORT

280

469

371

719

-4,0 -5,2 -3,7 -8,0

Nappies Baby Food Baby Milk

and Drinks

Baby

Toiletries

Million

s


39.1%

20.2%

25.5%

15.2%

Nappies Baby Food Baby Milk and Drinks Baby Toiletries

France

7

KEY TRENDS

• The baby sector experienced value sales

declines of 5.3% across hypermarkets and

supermarkets and declines of 2.7% across

hypermarkets, supermarkets and drive.

• Hypermarkets and supermarkets are losing

business to the drive channel, which still

very dynamic in France, especially for the

baby universe.

• Despite a shift to the drive channel, baby

category trends remain negative (-2.7%)

for the quarter, and declines escalated

during the last trimester (-2.9%).

• Declines are sharpest in the baby food

sector (-5.4% value sales); this sector

accounts for 40% of the losses suffered by

the market; baby milk sales are also falling

(-2.7%).

• Nappies (-1.2%) and toiletries (-1.6%) are

less affected.

469

371

280

719

Eu

ros,

in M

illi

on

s






PULSE REPORT

France

8

CATEGORY INSIGHTS

• Baby food is responsible for 40% of the losses experienced by the baby category with -41M€

sales versus last year while it only represents 26% of market share.



0 0 0 0 0 0 0


Millions

- 41.0

- 20.5

- 10.8

- 30.1

-50 -40 -30 -20 -10 0

BabyToiletries

Baby Milkand Drinks

Nappies

Baby Food

.Millions

PULSE REPORT

154

385

266

570

0.3 -2.9 -0.5

12.3

Nappies Baby Milk

and Drinks

Baby Food Baby

Toiletries

Million

s


41.5%

19.3%

28.0%

11.2%


Germany

9

KEY TRENDS

• The nappy category is the biggest sector in

the baby market. Stable growth is mainly

contributed by drugstores but hard

discounters, which launched a new range of

premium diapers throughout the year, are

also performing well. Soft discounters also

show positive development.

• Baby milk and drinks have experienced

double-digit growth, driven by the baby milk

category, which is benefitting from the

continued high demand from Chinese

parents to import high quality baby milk

powder from Germany. Major baby milk

channels are hypermarket and drugstores.

• Baby food experienced sharp declines for

the quarter, due to losses in drugstores

(Schlecker’s insolvency) and hard

discounters.

• The baby toiletries category shows a slight

decline due to losses in its main channel,

drugstores.

385

266

154

570

Eu

ros,

in M

illi

on

s



TOP 5 CATEGORIES: EVOLUTIONValue sales (€) and % change vs. year ago


PULSE REPORT

CATEGORY INSIGHTS

• Baby milk and drinks – The baby milk and drinks category is the strongest performing

category in the baby market. Baby milk, especially dry milk segment, is the main growth

driver, enjoying double-digit value and volume growth. Huge Chinese demand for German

baby milk powder continues, as Chinese consumers do not trust their local products. Chinese

people living in Germany buy the products and send them to China in large quantities to

resellers, leading to out-of-stock situations on German shelves, especially with the renowned

brands. Drugstores remains the main point of sale, with dm drug market being the major

store. Hypermarkets are also an important channel. The baby juices sector continues to

decline. Private label holds only 2.2% market share of baby milk and drinks but has shown

good growth.

• Nappies – Nappies market growth is mainly driven by drugstores (with about 60% value

market share), with double-digit growth of dm drug market. Hard discounters also play an

important role in pumping the sales growth based on a premium diaper range available since

Q4 2012. Hypermarkets experienced a decline in sales, which accompanied a dip in

promotions. Private label, which holds around 32% share, grew 3.0% for the quarter, with a

promotional boost of 11.4%.

• Baby toiletries – The main point of sale is still drugstores and its decline in sales is driving

the overall category losses. Discounters are capturing increased share of sales as sales

volume increases. Baby wipes are the main growing segment. Private label holds about 50%

share of the baby toiletries market, and is enjoying a stable growth.

• Baby food – The baby food category is in decline and is one of the main drivers for the

overall baby sector losses. All channels suffered losses, including major baby food channels,

such as drugstores, discounters and hypermarkets. Decrease in price/volume was not able to

compensate the losses. Private label has presence only in drugstores and shows a declining

trend.

Germany

10




- 7.9

- 0.8

-10 -8 -6 -4 -2 0

BabyToiletries

Baby Food

.

1.5

42.1

0 10 20 30 40 50

Baby Milkand Drinks

Nappies

Millions Millions

PULSE REPORT

116

324

149

393

-5.0 -6.1 -2.3 -6.4

Nappies Baby Food Baby

Toiletries

Baby Milk

and Drinks

Million

s


40.0%

15.2%

33.0%

11.8%

Nappies Baby Food Baby Toiletries Baby Milk and Drinks

Italy

11

KEY TRENDS

• Total baby care in Italy shows a 2.0%

decline in volume and drop in value of 5.3%

for Q3 2013. The negative volume trend is

mainly driven by strong sales declines in

hypermarkets (-8.4%) and supermarkets

(-3.3%), which account for 28% and 49% of

category sales, respectively.

• Baby food and baby toiletries, representing

a combined total of 48% of segment sales,

are also contributing to lackluster baby

category sales, particularly in hypermarkets.

Only the drugstores show a positive trend

across these sectors.

• The nappies segment is following overall

market trends. Category declines are

occurring mainly in traditional channels,

including hypermarkets (-10.3%),

supermarkets (-0.3%) and small self

service (-0.3%).

324

149

393

116

Eu

ros,

in M

illi

on

s




TOP 5 CATEGORIES: EVOLUTIONValue sales (€) and % change vs. year ago

PULSE REPORT

Italy

12

CATEGORY INSIGHTS

• Baby products are showing a negative trend in Q3 2013 versus Q3 2012, like most

consumers goods. For most categories mass markets account for almost 90% of the

business, leaving the remainder to the pharmacy channel.

• Brand loyalty is still very strong for all sub-categories, particularly in baby food, where

consumers are more informed and pay more attention to the healthy elements of baby

nutrition, without giving up their preferential choices.

• Fater maintained its lead in nappies in Italy with a retail value share of almost 61%. The

company’s strong position in the category is due mainly to the popularity of its Pampers

brand, which is highly trusted amongst Italian consumers. The brand’s loyalty has been built

up throughout time, thanks to continuous advertising and an interactive website with a wide

variety of utilities for mothers. They also have frequent launches of new and improved lines;

such as the re-launch of Pampers Progressi in 2012, suitable for new born to 25kg infants,

and are marketed as having an improved liner formulation to be more absorbing.

.




- 22.2

- 9.7

- 2.8

- 20.6

-25 -20 -15 -10 -5 0

Baby Milk andDrinks

BabyToiletries

Nappies

Baby Food

.

0 0 0 0 0 0 0

Millions Millions

PULSE REPORT

70

156

75

176

-9.0 -4.9 -6.0

42.4

Nappies Baby Milk

and Drinks

Baby

Toiletries

Baby Food

Million

s


36.9%

32.7%

15.8%

14.6%

Nappies Baby Milk and Drinks Baby Toiletries Baby Food

Netherlands

13

KEY TRENDS

• As a result of general FMCG market trends,

and declining birth rates, baby products in

the Netherlands are under pressure.

• Both channels show growth in total baby

compared to same period last year, with

supermarkets outperforming drugstores

supermarkets moving annual total (MAT)

index of +6% and drug of +4% in total

baby value sales. Growth is being heavily

influenced by the export of baby milk to

China. Toiletries, nappies and other baby

products are in decline, especially in

supermarkets. In drugstores, baby

toiletries volume grew slightly.

• Promotional pressure keeps increasing for

this category, to 59.3% in drugstores and

28.9% in supermarkets. This is mainly

driven by promotions in baby food

(excluding milk), toiletries and articles like

bottles.

156

75

176

70Eu

ros,

in M

illi

on

s






PULSE REPORT

Netherlands

14

CATEGORY INSIGHTS

• Baby food (excluding milk) is declining in both value and volume despite intensifying

promotional activity. Self-made meals are negatively impacting baby food performance.

• Nappies value sales turned negative in Q3, largely as a result of increased purchase activity

across non-FMCG channels, including online (Bol.com/ Wehkamp) or grey channels like

Action. There is also a small but growing trend towards washable nappies, with some

parents even going as far as not using any diapers (note: this trend is coming from the

United States).

• Though overall baby toiletries value sales declined, volume is stable in the drugstores

channel, supported by high promotional pressure.

• Despite huge growth of promotion in baby articles like comforters and bottles, baby articles

are in decline (in value as well as in volume).




- 17.4

- 3.9

- 4.4

-25 -20 -15 -10 -5 0

BabyToiletries

Baby Food

Nappies

.

46.5

0 10 20 30 40 50

Baby Milkand Drinks

Millions Millions

PULSE REPORT

29

136

47

422

-4.3 -7.6 -5.6 -5.7

Nappies Baby Milk

and Drinks

Baby Food Baby

Toiletries

Million

s


21.4%

66.6%

7.4%

4.6%


Spain

15

KEY TRENDS

• In Spain, the baby category declined in Q3

2013 (-4.9% value sales), with negative

performance cutting across all segments.

• The negative trend comes from decreases

of the birth rate, the power of private label

in all segments and the growing prevalence

of homemade meals.

136

47 29

422

Eu

ros,

in M

illi

on

s






PULSE REPORT

Spain

16

CATEGORY INSIGHTS

• Nappies is the largest segment of Spain’s baby category, representing 65% share—much

higher versus other countries. The sector is experiencing declines, driven by a reduction in

the birth rates and by the economic crisis. Prices continue to rise and consumers are opting

for cheaper and lower quality, and increasing the usage time of each diaper (talc and balm—

used to deter/treat irritations—are showing strong large growth). Private label has been a

player in this category for some time and represents 39% of total value sales (+4 points

versus year ago).

• There is also a decline in the demand for baby milk and drinks. This has been driven by

increased public awareness about the importance of breastfeeding. For this reason, most

mothers choose to breastfeed their children and lengthen the period of lactation. This is also

providing a significant savings for families. Furthermore, there is an increasing demand for

toddlers milk within private label.

• Baby food experienced declines in both volume and value sales in Q3. Private label captured

10 share points from national brands in Q3 3013, largely the result of increasing prices.

• Value sales experienced value sales declines, largely due to private label’s high share and

strong growth within the category.




- 19.0

- 3.9

- 1.7

- 8.2

-20 -15 -10 -5 0

BabyToiletries

Baby Food

Baby Milkand Drinks

Nappies

.

0 0 0 0 0 0 0

Millions Millions

PULSE REPORT

278

443

357

586

-1.5 0.8 0.9 10.0

Nappies Baby Milk

and Drinks

Baby

Toiletries

Baby Food

Million

s


35.2%

26.6%

21.5%

16.7%

Nappies Baby Milk and Drinks Baby Toiletries Baby Food

United Kingdom

17

KEY TRENDS

• Most baby categories experienced value

sales growth in Q3 2013. The exception is

nappies, which experienced a slight

decline.

• Milk is the fastest-growing segment in the

baby category, driven by a combination of

price increases, increased birth rate in the

UK and export sales to China due to health

scares.

443

357

278

586

Eu

ros,

in M

illi

on

s






PULSE REPORT

United Kingdom

18

CATEGORY INSIGHTS

• The UK is currently seeing a baby boom, with birth rates at their highest for 40 years. This is

helping drive overall sales of the baby sector.

• For baby milk, the impact of export of products to China appears to be declining (rolling 52

weeks is showing a declining growth rate). Still, the market continues to grow, helped by

inflation and a rising birth rate. Limits on number of items purchased per visit have now

been lifted and are no longer advertised on store shelves. Danone’s Aptamil and Cow & Gate,

the benefactors of export volume, continue to see share growth year-over-year at the

expense of SMA. Promotional activity across toddler lines is resulting in a slowing in growth

across categories targeting this life stage.

• Both toiletries and wipes experienced decelerating growth in Q3 2013. In toiletries,

promotional activity across branded lines declined, while private label promotion escalated.

• In nappies, value sales slide following the de-listing of Huggies Taped. Private label

continues to win the majority of the lost volume, rather than Pampers. Much of this volume

has been won off-shelf and at a lower price, supporting value sales declines.




- 8.7

-10 -8 -6 -4 -2 0

Nappies

.

2.4

2.8

40.1

0 10 20 30 40 50

Baby Milkand Drinks

BabyToiletries

Baby Food

.Millions Millions

PULSE REPORT

Final Notes

19

Notes on Category Definitions for Countries

Due to the diverse products found in individual countries across this market it was necessary to

consolidate the available data into the categories in this report. In some cases it was not

possible to align products across all six countries, hence the need to highlight any anomalies in

the report. These exceptions are listed below:

Baby Milk & Drinks

• The France data in this report only contains Baby Milk whereas the other countries also

include other Baby Drinks.

PULSE REPORT

Resources

20

About IRI. IRI is a leader in delivering powerful market and shopper information, predictive analysis and the foresight that leads to action. We go beyond the data to ignite extraordinary growth for our clients in the CPG, retail and over-the-counter healthcare industries by pinpointing what matters and illuminating how it can impact their businesses across sales and marketing. Move your business forward at IRIworldwide.eu

Arlington Square, Downshire Way, Bracknell, Berkshire RG12 1WA, Tel +44 (0) 1344 746000

Copyright © 2013 Information Resources, Inc. (IRI). All rights reserved. IRI, the IRI logo and the names of IRI products and services referenced herein are either trademarks or registered trademarks of IRI. All other trademarks are the property of their respective owners.

FOR MORE INFORMATION

Please contact Catalina González,Business Insights,

IRI at [email protected]

or +34-91 548 8080 with questions or comments about this report.

To gain insight into opportunities across specific categories, segments, channels or retailers,

contact your IRI client service representative regarding custom analyses leveraging the

following resources:

• InfoScan Census® is a syndicated retail tracking service that enables manufacturers and

retailers to acquire industry insights used to make better business decisions. InfoScan

Census utilizes the data that IRI collects from grocery, drug, and mass merchandise retailers

to provide the most comprehensive and accurate syndicated data offering in the FMCG

sector. With access to accurate, granular detail by category, geography, measure, and time

period, clients have the tools needed to develop marketing and sales strategies based on

product performance, distribution, and promotion responsiveness. All data about baby comes

from InfoScan Census®.

• IRI Consulting provides strategic insights and advice leveraging a variety of data sources,

predictive analytics, enabling technologies, and business analyses to help FMCG

manufacturers and retailers address significant sales and marketing issues effectively.

Documents

Pulse Report Baby Q3 2013