Back to basics in the baby food industry

Going against the received wisdom that the baby-food market is in decline has so far reaped rewards for Jan Bennink, the CEO of the Dutch baby food and vitamins firm Royal Numico.

by The Economist
Last Updated: 23 Jul 2013

The conventional wisdom has been that the long-term decline of populations will lead to an inexorable fall in demand in the baby food market. Believing this to be true, Bennink's predecessor diversified into the vitamin business, creating General Nutrition. When Bennink sold off the vitamin business in 2003, the company's stock value was low, reflecting a general belief that he had taken the wrong path. Its value then hit rock bottom at $842m but today has climbed to about $9bn.

Bennink used the cash from the sale of General Nutrition to reduce debt and re-invest in the baby-foods division. He made important management changes at the top as well as other operational improvements. Further, he focused on high-growth baby-food markets in India, Mexico and South Africa.

In addition, he worked harder on advertising the health benefits of their products, coming up with new forms of packaging and marketing. In France, growth has come in at around 8% per year for the last decade.

He is also bringing a smarter, consumer perspective to specialised products such as food for hospital patients. In the future, as Numico targets the baby-food consumer market everywhere, the company will be aiming to capture more of the US market (where there is the potential acquisition of Gerber, the US baby-food firm) or on the other hand, Numico itself might become a target for a big, multinational. 
 
Source: The baby-food king
The Economist, September 2 2006
Review by Morice Mendoza

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