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MNC brands dominate Malaysia's baby food market

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The baby food market in Malaysia is booming with multinational brands such as Danone, Nestle and Dutch Lady leading the way. These brands accounted for 75% of baby food sales by volume in 2014.According to a study by market research firm Canadean, around 29,375 tonnes of baby milks were consumed in Malaysia in 2014, accounting for 90% of the market value.“Although the volume of the baby food market in Malaysia only grew marginally over the last few years, the overall value has increased by over 60%. This is due to rising incomes, a decline in births and the trend towards super-premium and specialised baby food,” said the study. It added that the baby food market in Malaysia has been relatively stable over recent years in volume terms, despite minor fluctuations.In 2014, Malaysians bought 33,413 tonnes of baby food, representing a growth of 3.6% from 2008. However, in value terms, baby food increased by over 60%, reaching US$443 million in 2014.According to Canadean analyst Sam Allen, the declining birth rates in Malaysia will have a significant effect on the market as a whole, with specialised and follow-on milks increasing their market share in the next couple of years. Consequently, with the number of infants is shrinking, the number of toddlers aged 1-3 will also be increasing.“Milk suppliers are likely to focus on products for older children, and try to expand into the 3+ and 6+  years markets,” said Allen. The study also states that birth rates have declined by 4% between 2011 and 2014 and this trend is set to continue. By 2020, births will have declined by a further 7.6%.The study also found that commercial baby food is an important part of the food budget for families with small children.Not only was baby food one of the food categories least affected by the economic recession, but parents also tend to be loyal to particular baby food brands. Around half of families with babies said that they would not change their usual purchasing habits, and just 4% said they would buy less baby food because of food inflation or income problems.Allen says: “Most value growth will occur as a result of higher prices and the trend towards more premium products, including super-premium and more specialised milks.”

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