Savings and a reduction in the birth rate have reduced the demand for baby food

In 2022, Russians bought almost 8% less baby food and baby hygiene products - demand was affected by lower incomes and birth rates. During the previous crisis of 2014-2015, consumers saved,

In 2022, sales of baby food and hygiene products decreased in physical terms by 7.8% year-on-year, according to data from NielsenIQ research company, which RBC has read. The statistics took into account sales of FMCG (Fast-Moving Consumer Good) goods in traditional retail, as well as in online stores.

The largest decrease in consumption, according to NielsenIQ, occurred in the segment of viscous baby food (this includes, for example, fruit and vegetable purees) - it was bought by 20.2% compared to 2021. Demand declined for all major categories of baby food, including dry (purchased 13.3% less), ready-made drinks for children and dairy baby food (sales fell 10.3% and 8.6%, respectively). Sales of breast MILK substitutes fell by 5.4% year-on-year. In 2022, Russians bought less not only baby food, but also baby hygiene products. For example, the volume of sold diapers decreased markedly - by 8.3% year-on-year. Sales of talc fell by 9.6%, and baby cream fell by 12.1%.

In 2021, the consumption of baby food also decreased, but not at the same pace: for example, sales of viscous baby food fell by 1.9% compared to 2020, milk food - by 4.1%, dry baby food - by 6.8%, and drinks for baby food — by 2.6%.

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Despite the fact that in pieces, consumers bought fewer children's products in 2022 than a year earlier, they spent more on them. In monetary terms, sales of children's products and baby hygiene products grew by 10.5% year-on-year. Significantly increased spending on diapers (their sales in monetary terms were 17.7% higher than last year), breast milk substitutes (growth by 12.1%), baby milk food and drinks for children - an increase of 10.9 and 9 .8%, respectively, follows from the NielsenIQ data.

A similar trend in offline sales of the largest Russian retailers was recorded by the NTech research company: according to its data, the amount of baby food purchased decreased by 9% in 2022 compared to 2021, while in monetary terms, sales increased by 12.3%. The most significant decline, according to analysts, was in the consumption of milk cereals for children - sales in physical terms fell by 20.5% year-on-year, baby puree and fermented milk products - by 18.7 and 9.5%, respectively.

The decrease in the consumption of baby food was confirmed by RBC and the largest Russian manufacturer of these products, the Progress company (brand FrutoNyanya). PepsiCo (brands Agusha, Chudo detki, Prostokvashino, Domik v derevne) declined to comment. The Russian office of Danone (brands Rastishka, Tema, Prostokashino, Malyutka, Malysh and Nutrilon) did not respond to RBC's request.

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Why they began to buy less goods for children

The fall in sales of baby food and baby hygiene products in 2022 is explained by the desire of consumers to save money due to a decrease in real incomes and price changes, Dmitry Leonov, deputy chairman of the board of the Rusprodsoyuz association, believes. Among other reasons, the expert named the departure of some Western brands from Russia, a change in the assortment and a decrease in the birth rate.

During the previous crisis of 2014-2015, Russians reduced their consumption of consumer goods, but then they were not ready to save on children and pets: amid falling incomes, people cut spending, but sales of baby food and pet food showed growth, said in one of interview with CEO of Nestle in Russia Maurizio Patarnello.

How did the income of Russians

From 2014 to 2017, real disposable income (i.e., income minus mandatory payments, adjusted for inflation) of the population in Russia has been declining. In 2018, they showed near-zero growth (+0.1%), and at the end of 2019 they increased by 1% compared to the previous year. During the 2020 pandemic, the real disposable income of the population fell again - by 3.5%. But already in 2021, they returned to growth, which amounted to 3.1% - a maximum in 8 years.

In January-September 2022, according to available Rosstat data, real incomes decreased by 1.7% compared to the same period in 2021.

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The dynamics of consumption is associated with availability and price, and the cost of baby food has grown significantly over the past year, says Dmitry Vostrikov, executive DIRECTOR of the Rusprodsoyuz association. The price was affected by difficulties with the availability of raw materials and packaging associated with changes in supply chains, RBC explained in the press service of the Progress company. At the beginning of the year, the company's general director Natalya Medunova warned retail chains about raising prices by an average of 15.5%. There is a high proportion of imported raw materials in baby food: in 2016, the Russian authorities, due to a lack of domestic products, were even forced to specifically exclude MEAT and vegetables for baby food from the food embargo. Most infant formulas-breast milk substitutes were also supplied to Russia from abroad: in 2019, about 95% of such formulas were imported from the EU andusa . Difficulties arose for Russian manufacturers even with lids for baby food, tinplate for which was not produced in Russia and was imported from the EU, while its supplies were not subject to sanctions .

In the spring of 2022, after the start of a special military operation in Ukraine, baby food manufacturers in Russia began to reduce their assortment and focus on the most popular items, as well as cancel discounts. Progress, in particular, warned about the optimization of the assortment. Swiss Nestle decided to focus on the release of basic products in Russia, PepsiCo and Danone suspended investments in Russia, but promised to continue the production of dairy products and baby food.

A contribution to the negative negative dynamics of baby food consumption was made by rising inflation, a decrease in promotional activity and a decrease in the birth rate, says a representative of Progress.

The Ministry of Labor warned about the risks of a decrease in the birth rate in the coming years Economy

Why is the birth rate declining in Russia

According to Rosstat, in January-November 2022, the birth rate in Russia decreased by 6.8% year-on-year. For eleven months of the year, 1.2 million children were born in the country - 87.1 thousand less than a year earlier.

Among the main reasons for the decline in the birth rate, the Ministry of Labor and the National Research University Higher School of Economics
called the reduction in the number of women aged 20-29 (children are born by small generations of the 1990s and early 2000s), as well as uncertainty in the labor market - because of this, the birth rate in Russia may be declining until 2024. In addition, demographics can be affected by covid-19, a decrease in income due to the sanctions crisis, and any changes that lead to a decrease in living standards and confidence in the future among the young part of the population, experts explained.

Some parents began to refuse a number of categories of children's products that are not included in the mandatory diet of the child, and instead buy products presented on the "adult shelf", they add in Progress. Demand has changed as such, a representative of the Molvest company agrees (it produces dairy products under the Vkusnoteevo brand and Tender Age baby food): against the backdrop of the consequences of the pandemic and the start of a special operation, savings are visible, customers began to pamper themselves less, and they are becoming traditional products “without frills” are more in demand. For example, instead of yoghurts, consumers choose kefir, instead of sweet curds - cottage cheese, they add it to Molvesta.

Some parents really began to refuse to buy baby food in favor of conventional products, Antonina Tsitsulina, president of the Association of Children's Goods Industry Enterprises, agrees. According to her, this is due to the desire of consumers to save money because of the "difficult" financial condition. It is impossible to find an alternative to dry formulas that are breast milk substitutes, but, for example, meat or vegetable puree for children over one year old is easy to cook at home, notes Vostrikov. “When mashed potatoes cost 60-80 rubles, this is a sufficient reason to buy vegetables and fruits instead and make mashed potatoes at home for several doses - this will turn out more economically and from understandable products,” the expert adds. If the inflation rate continues to decline, and problems with the supply of raw materials and packaging are resolved, then the decline in consumption will slow down, they hope in Progress.

The Ministry of Agriculture called the situation on the baby food market stable. As RBC was told in the ministry, in January-November 2022, the production of milk powder and milk formulas for young children increased by 12.7% compared to the same period of the previous year, the production of canned meat for children remained at the level of 2021. The ministry added that the state supports producers with soft loans, stimulating subsidies and reimbursement of part of the costs. The Ministry of Agriculture, together with the Ministry of Industry and Trade, is also working on the issue of increasing the production of food ingredients necessary for enterprises.

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