Baby Food in Brazil

BABY FOOD IN BRAZIL
Euromonitor International
October 2015
BABY FOOD IN BRAZIL
Passport
LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Trends .......................................................................................................................................... 1
Competitive Landscape ................................................................................................................ 2
Prospects ..................................................................................................................................... 2
Category Data .............................................................................................................................. 3
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
Sales of Baby Food by Category: Volume 2010-2015.................................. 3

Sales of Baby Food by Category: Value 2010-2015 .................................... 3
Sales of Baby Food by Category: % Volume Growth 2010-2015 ................. 3
Sales of Baby Food by Category: % Value Growth 2010-2015 .................... 4
NBO Company Shares of Baby Food: % Value 2011-2015 ......................... 4
LBN Brand Shares of Baby Food: % Value 2012-2015 ................................ 4
Distribution of Baby Food by Format: % Value 2010-2015........................... 5
Forecast Sales of Baby Food by Category: Volume 2015-2020................... 6
Forecast Sales of Baby Food by Category: Value 2015-2020...................... 6
Forecast Sales of Baby Food by Category: % Volume Growth 20152020 ............................................................................................................. 7
Forecast Sales of Baby Food by Category: % Value Growth 20152020 ............................................................................................................. 7
BABY FOOD IN BRAZIL
BABY FOOD IN BRAZIL

HEADLINES
Baby food is set to grow by 11% in current value terms in 2015 to reach BRL3.6 billion
Danone is maintaining its investment in the Milnutri brand
Other baby food continues to present the highest growth in value terms of 21% in 2015
Cost pressures are forcing average unit prices to increase
Nestl remains category leader with a value share of 77% in 2015
During the forecast period baby food is expected to post a value CAGR of 5% in constant
2015 prices
TRENDS
The tough economic period endured by Brazil with high inflation rates added to the
depreciation of the local currency against the US dollar, has resulted in higher cost pressures
impacting raw materials, packaging and logistics. In addition, the recent increase in water and
electricity tariffs is also increasing production costs. In spite of this scenario, baby food
registered current value growth of 11% in 2015 to reach sales of BRL3.6 billion. This result is
due to the fact that parents always look for the best to offer to their children, combining
convenience and a balanced nutritional profile. As a result, consumers might rethink other
buying habits in order not to compromise the purchase of essential baby food products.
Convenience is key to the category, combined with a good nutritional profile of the offered
products, in order to achieve continued success within baby food. As more and more families,
especially women, work all day long and have more limited leisure time to spend with their
children or to prepare baby meals, products such as Mucilon Prontinho, a ready-to-drink
version of Nestls dried Mucilon, was launched to meet this need for convenience and time
saving. In 2015, the other baby food recorded current value growth of 21%, the highest within
baby food.
Breastfeeding in Brazil follows in line with the World Health Organization (WHO)
recommendation that in the first six months of its life a baby needs to be exclusively fed by its
mothers milk and until two years old it is suggested that it be used as a complement to the
babys diet. However, external influences such as society, industry and even doctors and
other health professionals tend to recommend the introduction of milk formulas and prepared
baby food even before a baby reaches six months.
Baby food retail volume growth in 2015 was lower than that in 2014 for all categories,
reflecting consumers concerns about the future of the country, in addition to the growing
maturity of the category. In retail value terms, growth was slightly higher, at 11%, reflecting
the cost pressures faced by several parts of the industry.
In spite of the slowdown in dried baby food consumption in some regions of the country, some
manufacturers are still investing in the category due to the strong consumption of this type of
product by babies in the north and northeast of the country. For example, Danone launched
Milnutri Cereais in the middle of 2014 and Nestl launched a new advertising campaign for its
Farinha Lctea brand running exclusively in the northeast region. This reflects a cultural factor
whereby consumers in the northeast region usually add some dried baby food mixed with milk
to a babys feeding bottle. Many parents believe that this is a good way to provide a healthy
and complete meal for their children.
Passport
BABY FOOD IN BRAZIL
COMPETITIVE LANDSCAPE
Nestl Brasil is the leader in baby food in Brazil with a value share of 77% in 2015. The
company has a very good reputation among Brazilians and is recognised for its offering of
high-quality products, an extremely important factor when it comes to baby nutrition. Another
reason behind the companys success is related to the fact that Nestl faces only limited
competition in some areas such as prepared baby food where just a few players, such as
Jasmine and Heinz, distribute these types of products. In spite of this, the company is
maintaining its investment in order to sustain consumer attention, and launched Nestl Frut at
the beginning of 2015, a fruit pure served in a pouch package, offering older children the
possibility of eating on their own. The product also claims to offer new experiences to
childrens palates and has no added sugar and preservatives.
Danone ranks second in baby food with a value share of 8% and recorded the highest growth
(37% in value) in 2015. The company is investing heavily in its Milnutri brand and after the
launch of Milnutri Cereais dried baby food in 2014, introduced Milnutri toddler milk formula to
compete against Nestls Ninho Fases. The product contains Pronutra, a mix of vegetable
oils and fibre and is being promoted primarily on blogs and at events targeting childrens food,
aiming to engage parents seeking balanced nutrition for children in the first years of their
development.
Jasmine Alimentos and Heinz are gaining some relevance in prepared baby food, with the
former exploring the organic segment and the latter the first to introduce products in pouch
format; however, overall baby food remains heavily dominated by international manufacturers
such as Nestl and Danone. The biggest challenge to increasing visibility around the country
is distribution, and thus far domestic players are not capable of expanding this effectively
through different channels (food and pharma).
The Ministry of Health of Brazil does not allow advertising of milk formulas; even the word
"baby" cannot be present in the names and brands of baby food products.
PROSPECTS
Baby food is expected to register a CAGR of 5% in constant value terms over the forecast
period, reaching sales of BRL4.5 billion in 2020, a slightly lower than expected performance
compared to the review period as the category is reaching a significant level of maturity, in
addition to economic uncertainties. However, novelties in terms of packaging and healthier
formulations with organic components, for example, are expected as means of gaining
consumers attention.
It is expected that the fixed costs of producing baby food will continue to rise in the short term,
following high inflation and the depreciation of the Brazilian currency against the US dollar.
However, Brazilian per capita expenditure on the population aged 0-36 months remains just
US$166 annually, well behind countries such as China and Singapore, with annual per capita
spending of US$1,043 and US$1,016, respectively, indicating the vast opportunity Brazil
offers.
Danone is expected to maintain its investments in Milupa milk formula and Milnutri dried baby
food, both expanding their reach within the Brazilian population. As advertising in this
category, especially for milk formulas, is restricted, companies need to find different ways to
let consumers know about their products by for example participating in conferences/, events
and parents meetings such as breakfasts promoted by role models such as Crescer
Magazine, Tips for Mommy and Ale Garattoni blogs.
Passport
BABY FOOD IN BRAZIL
Passport
CATEGORY DATA
Table 1
Sales of Baby Food by Category: Volume 2010-2015
'000 tonnes
Dried Baby Food

Prepared Baby Food
Milk Formula
- Standard Milk Formula
- Follow-on Milk Formula
- Toddler Milk Formula
- Special Baby Milk
Formula
Other Baby Food
Baby Food
Source:
2010
2011
2012
2013
2014
2015
56.5
9.4
27.8
8.2
5.6
13.8
0.3
56.2
9.9
31.4
9.3
6.3
15.5
0.3
55.4
10.4
34.1
10.3
6.8
16.6
0.4
55.3
11.1
36.7
11.2
7.4
17.8
0.5
55.3
11.6
39.5
12.0
7.9
19.0
0.5
55.2
11.8
42.0
12.9
8.4
20.2
0.6
0.5
94.2
0.9
98.4
1.2
101.0
1.4
104.5
1.6
107.9
1.7
110.8
Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 2
Sales of Baby Food by Category: Value 2010-2015
BRL million
Dried Baby Food

Prepared Baby Food
Milk Formula
- Special Baby Milk
Formula
Other Baby Food
Baby Food
Source:
2010
2011
2012
2013
2014
2015
1,023.3
247.6
810.2
301.9
182.0
290.0
36.3
1,139.7
283.5
1,006.4
381.8
229.5
350.3
44.9
1,189.2
311.9
1,155.0
444.1
264.8
396.1
50.0
1,234.4
354.9
1,340.7
518.1
310.5
452.0
60.2
1,283.7
391.5
1,521.2
595.3
353.4
502.2
70.3
1,372.3
433.1
1,736.1
682.2
401.6
569.5
82.8
4.9
2,086.0
9.0
2,438.6
12.1
2,668.2
16.4
2,946.3
20.6
3,217.0
24.9
3,566.4
Table 3
Sales of Baby Food by Category: % Volume Growth 2010-2015
% volume growth
Dried Baby Food

Prepared Baby Food
Milk Formula
- Special Baby Milk Formula
Other Baby Food
Baby Food
Source:
2014/15
2010-15 CAGR
2010/15 Total
-0.1
2.2
6.5
7.2
6.1
6.2
11.8
10.2
2.7
-0.5
4.7
8.6
9.6
8.4
7.9
15.9
27.9
3.3
-2.3
26.1
51.0
58.0
49.9
46.2
109.4
242.1
17.6
BABY FOOD IN BRAZIL
Table 4
Passport
Sales of Baby Food by Category: % Value Growth 2010-2015
% current value growth
Dried Baby Food

Prepared Baby Food
Milk Formula
Other Baby Food
Baby Food
Source:
2010-15 CAGR
2010/15 Total
6.9
10.6
14.1
14.6
13.6
13.4
17.7
21.1
10.9
6.0
11.8
16.5
17.7
17.1
14.4
17.9
38.7
11.3
34.1
74.9
114.3
126.0
120.6
96.4
128.3
413.4
71.0
Table 5
NBO Company Shares of Baby Food: % Value 2011-2015
% retail value rsp

Company
Nestl Brasil Ltda
Danone Ltda
Nutrimental SA
Indstria e Comrcio de
Alimentos
Mead Johnson Comrcio
Importao de Produtos
de Nutrio Ltda
Abbott Laboratrios do
Brasil Ltda
Unilever Brasil
Alimentos Ltda
Coniexpress SA
Indstrias Alimentcias
Novartis Biocincias SA
Unilever Bestfoods
Brasil Ltda
Support Produtos
Nutricionais Ltda
Private Label
Others
Total
Source:
2014/15
2011
2012
2013
2014
2015
81.1
3.8
5.3
81.4
4.2
5.5
80.9
5.1
5.1
79.7
6.3
4.9
77.3
7.7
4.6
0.8
1.0
1.4
1.6
1.8
1.2
1.4
1.5
1.6
1.7
2.2
2.1
1.8
1.7
1.5
0.1
0.2
0.3
0.3
5.3
100.0
0.3
4.2
100.0
0.2
3.8
100.0
0.2
3.9
100.0
0.2
4.8
100.0
Table 6
LBN Brand Shares of Baby Food: % Value 2012-2015
% retail value rsp

Brand
Company
2012
2013
2014
2015
Mucilon
Nan
Nestl Brasil Ltda

Nestl Brasil Ltda
21.1
15.1
20.3
15.5
19.6
15.5
18.5
15.3
BABY FOOD IN BRAZIL
Ninho
Nestl Baby
Nestl Farinha Lctea
Nestgeno
Aptamil
Nutrilon
Nutribom
Enfamil
Similac
Milupa 1
Milnutri
Arrozina
Milupa 2
Cremogema
Heinz
Bebelac
Gerber
Nutriton
Nutron
Aptamil
Arrozina
Cremogema
Private label
Others
Total
Source:
Passport
Nestl Brasil Ltda

Nestl Brasil Ltda
Nestl Brasil Ltda
Nestl Brasil Ltda
Danone Ltda
Nutrimental SA
Alimentos
Nutrimental SA
Alimentos
Mead Johnson Comrcio
Importao de Produtos
de Nutrio Ltda
Abbott Laboratrios do
Brasil Ltda
Danone Ltda
Danone Ltda
Unilever Brasil
Alimentos Ltda
Danone Ltda
Unilever Brasil
Alimentos Ltda
Coniexpress SA
Indstrias Alimentcias
Danone Ltda
Novartis Biocincias SA
Nutrimental SA
Alimentos
Nutrimental SA
Alimentos
Support Produtos
Nutricionais Ltda
Unilever Bestfoods
Brasil Ltda
Unilever Bestfoods
Brasil Ltda
Private Label
14.8
11.7
12.1
6.6
2.7
2.9
15.0
11.9
11.5
6.7
3.3
2.7
15.1
11.9
10.9
6.7
3.9
2.6
14.9
11.8
10.2
6.6
4.4
2.4
2.6
2.4
2.3
2.2
1.0
1.4
1.6
1.8
1.4
1.5
1.6
1.7
0.5
1.1
0.9
0.4
0.9
1.2
0.6
0.9
1.5
1.1
0.8
0.3
1.0
0.5
0.9
0.6
0.8
0.7
0.7
0.1
0.2
0.3
0.6
-
0.3
4.2
100.0
0.2
3.8
100.0
0.2
3.9
100.0
0.2
4.8
100.0
Table 7
Distribution of Baby Food by Format: % Value 2010-2015
% retail value rsp
Store-Based Retailing
- Grocery Retailers
-- Modern Grocery
Retailers
--- Convenience Stores
--- Discounters
--- Forecourt Retailers
--- Hypermarkets
--- Supermarkets
2010
2011
2012
2013
2014
2015
99.7
86.7
78.2
99.7
86.6
78.2
99.7
86.6
78.2
99.7
86.7
78.4
99.7
86.6
78.3
99.7
86.6
78.3
0.1
0.2
0.0
37.1
40.8
0.1
0.2
0.0
37.3
40.7
0.1
0.2
0.0
37.2
40.8
0.1
0.2
0.0
37.1
41.0
0.1
0.2
0.0
37.1
40.9
0.1
0.2
0.0
37.1
40.8
BABY FOOD IN BRAZIL
-- Traditional Grocery
Retailers
--- Food/drink/tobacco
specialists
--- Independent Small
Grocers
--- Other Grocery
Retailers
- Non-Grocery Specialists
-- Health and Beauty
Specialist Retailers
-- Mixed Retailers
-- Other Foods NonGrocery Specialists
Non-Store Retailing
- Vending
- Homeshopping
- Internet Retailing
- Direct Selling
Total
Source:
Passport
8.5
8.4
8.4
8.3
8.3
8.3
8.5
8.4
8.4
8.3
8.3
8.3
10.7
10.7
10.8
10.8
10.9
10.9
10.9
10.9
11.0
10.9
11.0
10.9
2.3
-
2.3
-
2.2
-
2.0
-
2.0
0.0
2.1
0.0
0.3
0.3
100.0
0.3
0.3
100.0
0.3
0.3
100.0
0.3
0.3
100.0
0.3
0.3
100.0
0.3
0.3
100.0
Table 8
Forecast Sales of Baby Food by Category: Volume 2015-2020
'000 tonnes
Dried Baby Food

Prepared Baby Food
Milk Formula
- Special Baby Milk
Formula
Other Baby Food
Baby Food
Source:
2015
2016
2017
2018
2019
2020
55.2
11.8
42.0
12.9
8.4
20.2
0.6
55.1
12.2
44.6
13.7
8.9
21.4
0.6
55.1
12.6
47.0
14.4
9.4
22.6
0.7
55.2
12.9
49.5
15.2
9.9
23.7
0.7
55.2
13.3
52.1
15.9
10.4
24.9
0.8
55.3
13.7
54.7
16.7
11.0
26.1
0.8
1.7
110.8
1.9
113.8
2.1
116.8
2.2
119.9
2.4
123.0
2.5
126.2
Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Table 9
Forecast Sales of Baby Food by Category: Value 2015-2020
BRL million
Dried Baby Food

Prepared Baby Food
Milk Formula
- Special Baby Milk
Formula
Other Baby Food
Baby Food
2015
2016
2017
2018
2019
2020
1,372.3
433.1
1,736.1
682.2
401.6
569.5
82.8
1,395.9
457.3
1,870.8
735.7
431.3
611.8
92.1
1,418.5
476.7
2,003.0
785.4
462.0
654.5
101.0
1,439.3
497.0
2,137.5
837.8
493.2
697.1
109.3
1,459.0
517.5
2,273.8
890.1
525.7
740.3
117.8
1,478.3
538.2
2,410.3
942.3
558.4
783.7
126.0
24.9
3,566.4
27.8
3,751.8
30.7
3,928.8
33.3
4,107.1
35.9
4,286.2
38.5
4,465.3
BABY FOOD IN BRAZIL
Source:
Passport
trade sources
Table 10
Forecast Sales of Baby Food by Category: % Volume Growth 2015-2020
% volume growth
Dried Baby Food

Prepared Baby Food
Milk Formula
Other Baby Food
Baby Food
Source:
Table 11
2015/16
2015-20 CAGR
2015/20 Total
0.1
2.8
5.0
4.9
5.3
4.9
5.9
6.3
2.6
0.0
3.0
5.4
5.4
5.5
5.3
7.8
7.7
2.6
0.2
15.8
30.0
29.8
30.8
29.4
45.9
44.9
13.9
trade sources
Forecast Sales of Baby Food by Category: % Value Growth 2015-2020
% constant value growth
Dried Baby Food

Prepared Baby Food
Milk Formula
Other Baby Food
Baby Food
Source:
2015/2016
2015-20 CAGR
2015/20 TOTAL
1.3
4.0
6.0
5.9
6.2
5.9
7.0
7.2
4.2
1.5
4.4
6.8
6.7
6.8
6.6
8.8
9.1
4.6
7.7
24.3
38.8
38.1
39.0
37.6
52.3
54.6
25.2
trade sources

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