By:- Vrinda Bhagat - Suprotim Rao Symbiosis Institute of Media & Communication, Pune

Krunchh 2013

Team SIMCians (74860)

Research and analytics for a milk food brand launching in India (forecasting trends and consumer behavior)

THE FORMULA MILK CATEGORY IN INDIA

- In the past, baby food and formula market in India had witnessed a CAGR of 4.18% from 2006-2011.

- Baby food forms the largest segment and accounts for 50.52% of the total retail sales of baby food and formula market.

- Baby food which constitutes dried and ready to feed food products grew at a meagre CAGR of 3.88% during the period from 2007-2011 ,

- India is world’s largest milk producer and contributes almost 15% to the total milk production worldwide. Consumption of dairy products is also high in the country. -Baby powder and food account for highest revenue generation in terms of export of dairy products. In 2011 almost 47% of milk powder and baby food was exported to other countries (by volume) .

- With over 25m children born each year, India is the fastest-growing infant nutrition market in the world.

- Some 86% of households in large metropolitan cities such as Mumbai and Delhi expressed a preference for weaning (infant formula) foods in a survey of 3,000 homes by the Association of Chambers of Commerce and Industries of India.

Although infant formulas are becoming progressively more like breast milk in composition, health authorities worldwide advise mothers that 'breast is best' in passing on natural immunity before a child's own immune system kicks in.

FORECASTING IFM SALES VOLUME

The sales volume of Infant Formula Milk is predicted to increase in the next two years, i.e. till the second quarter of the year 2015.

It is expected to grow from 9631 tons in 2nd quarter of 2013 to almost 9816 tons in the 2nd quarter of 2015.

There is approximately an average growth of 0.2% in sales volume of IFM in each quarter and the yearly growth is approximately 2.7%

FORECASTING IFM SALES VALUE

The sales value of Infant Formula Milk is predicted to increase in the next two years, i.e. till the second quarter of the year 2015.

It is expected to grow from 7372 million Rs in 2nd quarter of 2013 to almost 7713 million Rs in the 2nd quarter of 2015.

There is approximately an average growth of 5% in sales volume of IFM in each quarter and the yearly growth is approximately 5.7%.

The growth in sales value of IFM is better than its sales volume. Thus, the average price is increasing over the given time period.

FORECASTING CFM SALES VOLUME

The sales volume of Child Formula Milk is predicted to increase in the next two years, i.e. till the second quarter of the year 2015.

It is expected to grow from 7836 tons in 2nd quarter of 2013 to almost 8291 tons in the 2nd quarter of 2015.

There is approximately an average growth of 0.6% in sales volume of IFM in each quarter and the yearly growth is approximately 1.2%

FORECASTING CFM SALES VALUE

The sales volume of Child Formula Milk is predicted to increase in the next two years, i.e. till the second quarter of the year 2015.

It is expected to grow from 6619 million Rs in 2nd quarter of 2013 to almost 7278 million Rs in the 2nd quarter of 2015.

There is approximately an average growth of 1% in sales volume of IFM in each quarter and the yearly growth is approximately 3.6%.

The growth in sales value of CFM is better than its sales volume. Thus, the average price is increasing over the given time period.

FACTORS AFFECTING THE FORMULA MILK CATEGORY

- Education plays a vital role in changing taste and preferences. It has been observed that consumption of baby food is higher in families where both the parents are educated and working.

- Pricing is the major concern for baby food manufacturers in the country. Only one fourth of the population belongs to upper middle class and high class.

- Baby juices are still in its infancy stage and facing difficulty to gain importance because more than three fourth parents among the total population believe to feed fresh fruit juice to their kids.

- Growth is being driven by increased nutritional awareness, more young working mothers, rising affluence among the country's nuclear families and the sheer number of births.

- Consumers in smaller cities still prefer traditional products such as lentil soup, semolina and rice porridge to wean infants off breast milk.

-National legislation based on the World Health Organization's International Code of Marketing of Breast-milk Substitutes restricts advertising.

- Every year, there is a growth expected in formula baby food demand with rising number of health conscious parents, working mothers and increasing company’s efforts to make the product available in all parts of the country.

RELATION BETWEEN IFM & CFM CATEGORIES

Correlations between Value

Sales Value IFM & Average Price IFM 0.9

Sales Value CFM & Average Price CFM 0.8

Average Price IFM & Average Price CFM 0.9

Sales Value IFM & Sales Value CFM 0.7

The average price of IFM is highly correlated with its sales value. As the price of IFM increases, the sales value also increases. However, the volumes of IFM do not move with such a strong correlation.

Similarly, as the average price of CFM increases, the sales value of CFM increases. Although, the volumes of CFM do not move with such strong correlation.

There is also seen a strong correlation between both the categories, IFM & CFM. If the average price of IFM increases, the average price of CFM also increases and vice versa.

Also, we can see that when the sales value of IFM increases, the sales value of CFM also increases and vice versa.

SUMMARY

• The Formula Milk category in India is still in its nascent stage as compared to its growth in other countries.

• Various brands like Nestle, Danone are trying to penetrate deeper in the Indian market by creating the need for the product.

• As per the given data, the future forecasting of sales shows a brighter picture.

• However, various socio economic factors come into play to shape the growth of the category.

• However, it can be certainly said that both the categories, IFM and CFM are strongly related to each other.

• Price and awareness about the category are two most important factors driving the category.

• While the babies are the consumers of the product, mothers are the customers of the product. Hence, the communication should be with the mothers, based on the factors that affecting their decisions.

REFERENCES

THANK YOU

http://www.marketresearch.com/Ken-Research-v3771/India-Baby-Food-Formula-Bright-7088054/

http://www.just-food.com/analysis/danone-enters-indias-buoyant-infant-formula-market_id116308.aspx

A report by Technopak Consultants on “baby foods” in India.