Nestle faces increased competition in the Taiwanese baby food market
In the burgeoning baby meals and finger foods sector in Taiwan, Nestle, although still the clear sector leader with 60% of value sales, is facing increasing competition.
Nestle’s share has been steadily eroded in recent years. The main competition is coming from German organic baby food specialist Hipp, which has succeeded in boosting its share from 15% in 2010 to 22% by 2016.
Despite the small size of the market - just 475 tonnes in 2016 - it has recently attracted a number of other players. These include Vitagermine, Heinz, Danone, Hero and QP from Japan. Their share has more than doubled between 2010 and 2016.
The rivals to Nestle are filling niches that Nestle’s Gerber brand has yet to address. Both Hipp and Vitagermine offer organic ranges. These two manufacturers have both also introduced meals in pouches, as has Heinz, while Nestle continues to sell its baby meals in traditional jars.
Although Nestle has a strong presence in supermarkets, these outlets tend to stock a very limited range of baby foods, and they are losing out to drugstores such as AS Watson and Cosmed and baby stores like Sweet Family. Meanwhile, although Nestle does have some presence in drugstores and baby shops, Hipp and the other new arrivals focus their sales on drugstores and baby shops. The drugstore/baby store channel is steadily gaining ground and now outsells the supermarket/hypermarket channel in baby food. Nestle’s rivals also have a strong representation in the growing e-commerce sector via sites such as Tin Tin and Woodpecker.
At the moment, Nestle does not appear to be meeting the needs of young, modern, technology savvy, urban parents, and it will need to up its game if it is to fight off the competition.