Over the last several years, the kids' food and beverage market has been defined by the American public's growing concern about nutrition and the escalating obesity epidemic. The recession played an equally influential role on the market's trajectory. Nevertheless, "Kids Food and Beverage Market in the U.S." by market research publisher Packaged Facts cites recent developments as evidence that the industry is on the brink of a breakthrough, and growth of 40 percent is expected from 2010 to 2015.
"The kids' food market gained attention after the turn-of-the-century, but never really had a fair chance to gain momentum, as the recession entered the picture," says Don Montuori, publisher of Packaged Facts. "In 2009 and 2010, a number of marketers turned up the heat and started getting aggressive in this very important food marketing segment. We forecast that the next several years going into 2015 will mark a period of tremendous growth in the sales and development of food and beverage products marketed and designed for children."
According to the report, the kids' food market is a broad and complex one, spanning numerous categories and product segments. Packaged Facts qualifies a food as being a kids' food when it has a taste kids love, nutrition kids need, or entertainment kids crave. Ideally the product would possess all three of these characteristics through formulation, packaging, and marketing.
Packaged Facts estimates that retail sales of kids' foods hit the $10 billion mark at the end of 2010. This includes sales from all retail channels and reflects an increase of 25 percent from 2005. The report divides the market into eight segments: frozen foods, dairy products, beverages, cereal, produce, meals (shelf-stable), snacks (salty and sweet), and other.
At more than $2 billion, the frozen foods segment is the largest in the market, accounting for 23 percent of retail sales. Beverages come in second, followed by dairy products. Interestingly, what makes frozen foods the largest segment is the sub-category of ice cream/novelties, a very flat business that nevertheless can prove irresistible to kids and parents alike when featuring popular cartoon characters such as Shrek or Dora the Explorer. The beverage segment is large because of the abundance of conveniently packaged aseptic juices and juice drinks in boxes and pouches. Dairy products lead in the kids' market, with yogurt being one of the leading foods served to kids as a snack-driving sales.
Packaged Facts further estimates that in 2010, 40 percent, or $4 billion of the kids' food market, could be described as having some better-for-you element, a revelation in harmony with the industry's increasingly health-conscious focus. This includes products with claims such as "made with whole wheat" and "lower sugar." The other 60 percent, or $6 billion of products, are described as traditional. The primary sub-category that keeps the traditional segment in the lead is ice cream/novelties business.