Times are tough for the baby formula category in the U.S., which means that attracting and maintaining sales have become more important than ever. One key component in the battle to capture new parents’ dollars is to offer the choice of a private label brand. Although private label baby formulas are nothing new, in response to the current state of affairs, grocery retailers are raising the profile of such products – and stressing their value proposition – more aggressively than before.
According to Nielsen figures for food, drug and mass merchandiser stores, including Walmart, infant formula sales dollars fell 6.7 percent for the 52 weeks ended April 17, 2010, while sales dollars for private label products in the category during the same time period plunged 7.1 Percent..
A still-sluggish economy has no doubt played a key role in this decline, as it encourages price-hunting parents to go elsewhere to purchasefrom anonymous sellers items that may be stolen, but other factors are at work as well. Earlier this year, Steve Delello, category manager-health and wellness at Tyler, Texas-based Brookshire Grocery Co., offered his observations: “During the last six months, formula sales are down and baby food sales are up. The largest contributor to this dynamic is due to changes in the WIC ‘Women Infants and Children’ program. In October, the WIC allotment of formula was reduced by 10 percent, affecting more than half of the customers buying formula. A decline in birth rates also influences sales in baby formula.”
The Private View
Given such unfavorable conditions, grocers are eagerly pushing their own brands of formula as a viable alternative for cash-strapped consumers. Noted Jimmy Faller, category manager for pet and baby at Salisbury, N.C.-based Food Lion, LLC, a division of Belgian retail conglomerate Delhaize Group: “At this time, we carry three private-brand baby formula items at a considerably lower retail than the national brands. This allows us the opportunity to provide a quality nutritional item at a greater value to our consumers.” Minneapolis-based Supervalu offers four private label formulas under its Baby Basics brand, among them a soy-based item and a Gentle variety, the latter of which is “easy to digest and contains one-fourth the amount of lactose of standard milk-based formulas,” according to Kristin Parsons, Supervalu Baby Basics brand Manager.
Parsons stresses that the product line is comparable to any of the trusted national brands on the market. “Our exclusive private label brands, which include Baby Basics, are designed to meet consumer needs for quality and value, leading [shoppers] to seek out our stores for our private brands,” she explains. “The FDA sets strict nutritional guidelines that all U.S. infant formula companies must follow. Every infant formula brand on the shelf – whether national or private label – must be nutritionally equivalent and made to the same high quality standards.” Target, also based in Minneapolis, last year relaunched its private label baby items, including six varieties of formula, under the up & up brand. ‘Our focus is to have the right assortment of products and brands for our guests, be they national or owned brands, including baby formula,” notes company spokeswoman Erin Madsen.
To judge from comments from moms on Target’s Web site, the retailer has succeeded with many bargain-hunting shoppers in terms of low cost and high quality. “I get twice as much formula for almost half the price, and my baby is still getting the same amount of nutrition and… loves the taste,” gushes Sarah C. “Please check it out and see for yourself; it is saving my family so much money, and we’re getting a product that compares side by side with name brands. The price, savings and comparable quality/taste will all speak for themselves.”
As a way of encouraging trial of its Member’s Mark private label formula line, Sam’s Club, the warehouse club division of Bentonville, Ark.- based Wal-Mart Stores, Inc., offers on its Web site free samples of either its Milk-Based or Gentle formulas, along with the chance to receive special offers and announcements from Member’s Mark and Sam’s Club. Sister chain Walmart has a similar online offer for its own Parent’s Choice formula, with an opportunity for parents to provide constructive feedback on the product through an emailed Questionnaire.
Not content merely to allude to savings without going into specifics, Sam’s Club points out on its site that new parents who opt for Member’s Mark formula could save an estimated $850 during their babies’ first year. The site additionally provides a chart so that parents can make the comparison for themselves. Brand Sensitive Meanwhile, national brands are remaining in play by offering the inventive solutions they say parents crave.
“Abbott is showing its continued leadership in the infant formula category by making it easier for parents to provide their newborns with excellent nutrition,” notes Rhonda Hoffman, division VP, pediatric nutrition marketing at Abbott Park, Ill.-based Abbott Laboratories, maker of Similac, the No. 1 brand in the U.S. baby formula market since 2009.
For instance, according to Hoffman: “The new colour-coded Similac infant formula labels have been redesigned to clearly showcase the various formula categories – Similac Advance, Similac Sensitive, Similac Expert Care and Similac Go & Grow – helping parents pinpoint which formula best suits their baby’s needs.”
Among the product innovations the brand has rolled out in response to consumer requests is the addition of EasyShield, featuring nucleotides, prebiotics, carotenoids, DHA (omega-3) and ARA (omega-6) to support a baby’s developing immune system, brain, eyes and bones, to the Similac Sensitive and Similac Sensitive Isomil Soy formulas. The items hit store shelves last month. Similac Advance, which bowed in 2008, also contains EasyShield, and Hoffman adds that Abbott is currently evaluating whether other formulas in the product line will feature the cuttingedge Ingredient..
While many formulas offer special nutrients to help infants thrive, EasyShield is unique, the companymaintains. “Similac is the only formula brand that has added a unique combination of carotenoids (lutein, lycopene and beta carotene),” says Hoffman. “Carotenoids are special nutrients naturally found in breast milk that have been shown to protect against cell damage to help keep eyes healthy. Lutein is known to accumulate in, and help protect, the eye. In addition, Similac is supporting strong bone development by being the only leading brand with a palm olein-free oil blend to promote calcium absorption.”
The brand’s forward thinking extends to its recent packaging introductions as well. “Since 1959, when the Similac brand introduced its first powder formula, most U.S. infant formulas have been packaged in cans,” observes Hoffman. “In 2009, Abbott was the first company to replace the can with Similac SimplePac … The Similac team at Abbott conducted extensive research with more than 1,600 moms to understand how to make formula preparation easier. With the moms’ feedback, we redesigned the standard infant formula can into an innovative, easyto- use package. With the one-hand grip, hinged lid and scoop in the lid, Similac SimplePac makes bottle preparation less messy and allows for cleaner formula, since parents don’t need to dig through the powder with their fingers to find the scoop.”
As a way to enhance its already strong relationship with new mothers, Abbott has launched a “Feeding Expert” service, a free, 24/7 feeding and nutrition information resource that aims to help smooth the transition from hospital to home for moms and babies. Consumers can also visit the brand’s interactive online community, StrongMoms.com, for such freebies as samples, coupons and expert advice.
Rather than resting on its laurels, however, the company works hard to promote its latest offerings at retail. “To support the redesign of new color-coded Similac infant formula labels … we developed atshelf communication for consumers: ShelfTalk and ‘coming soon’ stickers that highlighted the change,” notes Hoffman. “We also created materials to help the stocker: posters to hang in the back room, case stickers that highlight the change, a video to educate store personnel and a sales aid.”
Abbott also understands the needs of its retailers. “Retail shelves can hold up to 33 percent more of the rectangular Similac SimplePac containers compared to cans, whose round shape results in unused and inefficient shelf space,” explains Hoffman. “In addition, the containers are easy to stack and more visually appealing to consumers.”
Off to a Good Start
In February of this year, Nestlé relaunched its infant formula line under the Gerber Good Start brand, leveraging the prestige of an iconic brand name that’s been synonymous with babies for decades. The manufacturer acquired Gerber in 2007. “A child’s nutrition journey begins at birth,” explained Glendale, Calif.-based Nestlé USA, which is a part of Nestlé S.A. in Vevey, Switzerland, the world’s largest food company. The rebranded line is part of Start Healthy, Stay Healthy, which Nestlé refers to as “an integrated nutrition system for children 0-48 months.”
The milk-based formulas – the only ones on the market to feature easy-to-digest Comfort Proteins, the company notes – are Gerber Good Start Gentle Plus for babies 0 to 12 months, Gerber Good Start 2 Gentle Plus for babies 9 to 24 months, Gerber Good Start Protect Plus for babies 0 to 12 months and Gerber Good Start 2 Protect Plus for babies 9 to 24 months, and the soy-based formulas, which include Gentle Soy Proteins, consist of Gerber Good Start Soy Plus for babies 0 to 12 months and Gerber Good Start 2 Soy Plus for babies 9 to 24 months.
All of the formulas feature DHA and ARA to support visual and cognitive development, along with a blend of zinc, vitamin A, and antioxidant vitamins C and E for natural immune system protection, while the Protect Plus varieties contain Bifidus BL, which are described by Nestlé as “beneficial cultures like those found in breast milk.”
Suggested retail prices range from $19 to $25 per 24-ounce canister.
Retail Crime Bodes Bad for Babies
A survey released in March by the Retail Industry Leaders Association (RILA), found that retail crime was continuing to rise in an economy just beginning to rebound, with baby formula, diabetic test strips and over-the-counter medicines in the crosshairs of the spree. According to the January 2010 RILA Current Crime Trends Survey, 78 percent of retailers saw an increase in amateur and opportunistic shoplifting, 65 percent noted an increase in organised retail crime, and74 percent experienced an increase of stolen items being discovered in online marketplaces.
“These trends are deeply troubling,” said Casey Chroust, EVP, retail operations at the Arlington, Va.- based trade organisation. “We have seen a steady increase in retail crimes over the last year as criminals continue to take advantage of the economic climate to expand their activity. Not only are retailers presented with additional challenges due to these increases in crime, but communities and consumers [also] lose when the proceeds from these crimes are used to fund additional criminal activity.” As noted above, a key concern is that the health and safety of end users could be endangered when such sensitive stolen items as baby formula, diabetic test strips and over-thecounter medicine are mishandled or Altered.
For its latest survey on the topic, RILA, which has been tracking crime trends in the current economy since 2008, asked retail loss prevention professionals to report measured or perceived changes in crimes against retailers over the previous six months. Among the respondents were the biggest U.S. retailers, including those in the grocery, mass merchant, speciality store, apparel, electronics, appliances, and fabric and craft retail channels.
Retailers additionally rated the level of assistance and information received from federal, state and local law enforcement, online auction sites and other retailers when compiling cases and investigations. Respondents noted that other retailers offered the most assistance and information, closely followed by state and local law enforcement. Federal law enforcement was seen as offering some assistance but limited information. Online auction sites were rated as improving but still needing to offer further information and assistance. Retailers said they’d seen no decreases in stolen items being found in online marketplaces, pawnshops, flea markets and traditional fencing operations. Seventy-five percent saw more stolen items being found in online marketplaces, 47 percent in flea markets, 47 percent in traditional fencing operations and 16 percent in pawn shops.
The report also found that retailers are experiencing an increase in burglary and fraud, while other kinds of crimes, including robbery and ID theft, haven’t risen in frequency but are still problematic. These findings are consistent with historical crime trends related to economic distress and job instability, according to RILA.
As Carol Martinson, VP of the Asset Protection Group at Minneapolis- based Supervalu, noted last year in testimony supporting Minnesota bill House File 755, which proposed to add felony theft to the racketeering statute and add identity theft to the enhanced penalty for theft, “We have seen an increase in the market for baby formula theft in this economy, presumably to meet the growing demand of people looking for low prices in a tough economy and turning to Craigslist or other less conventional outlets to find a deal.”
Ongoing collaboration and partnership among retailers, national and state trade associations, legislators and law enforcement is key to stemming these increases, the RILA survey found. Also in March, the trade group and eBay agreed to work together in this regard. A six-month test rolled out in Kansas City Mo., by the U.S. Secret Service in May involves computer software that seeks out sites selling stolen goods. It is hoped that the software, which was developed by a private security expert, will resolve a greater number of retail theft cases more quickly. “One man who used it solved a case in 11 minutes,” special agent Charles Green told the Kansas City Star.
ORC cases can have repercussions beyond even those to retailers and consumers, the newspaper reported. A 2005 Texas case involving stolen baby formula and other goods resulted in felony charges filed against over 40 suspects, with some crime proceeds traced to the terrorist group Hamas. “To put it succinctly,” Joseph LaRocca, a senior adviser to RILA, told Congress, “baby formula theft was funding assassination plots and international terrorism.”
