The baby start-ups get­ting the gi­ants in a lather

Her­itage com­pa­nies such as John­son & John­son are fac­ing in­creas­ing com­pe­ti­tion from ‘nat­u­ral’ ri­vals, finds Ash­ley Arm­strong

The Sunday Telegraph - Money & Business - - Business - The week ahead Eco­nom­ics: Eco­nom­ics:

When Teresa Queiros was grow­ing up her mother would reg­u­larly bathe her in John­son & John­son’s baby lo­tions and sham­poo. But now that Queiros has her own daugh­ter, John­son & John­son is miss­ing from the bath­room shelf.

“I look for chem­i­cal-free and nat­u­ral in­gre­di­ents or any prod­ucts that my der­ma­tol­o­gist friend rec­om­mends,” Queiros says.

The 33-year-old lawyer is one of a grow­ing num­ber of new par­ents es­chew­ing the baby prod­ucts fa­mil­iar to their gen­er­a­tion in favour of smaller, nat­u­ral brands. The shift in tastes is caus­ing teething pains for the world’s big­gest con­sumer gi­ants. While their sales slide, eco-friendly brands such as Childs Farm, Pro­fes­sor Scrub­bing­tons, Kokoso, Neal’s Yard and Burt’s Bees are boom­ing as they jos­tle with the in­dus­try ti­tans for space on shelves.

“Cus­tomers get older and no longer need your prod­ucts, so brands have to fight hard over and over again to win the next gen­er­a­tion of in­fants and young par­ents”, ex­plains John Spayne at cor­po­rate fi­nanciers Spayne Lind­say.

The baby food in­dus­try has also been turned up­side down, pre­vi­ously dom­i­nated by Nes­tle and Heinz, it now has a small army of chal­lenger brands from Or­ganix, Ella’s, Lit­tle Dish, Kid­dy­li­cious and Pic­colo. Ella’s Kitchen be­came the UK’S mar­ket No FTSE 350 com­pa­nies re­port­ing Manufacturing PMI (UK, US and Eu­ro­zone)


Full-year re­sults:

Green­core, Vic­trex

Trad­ing state­ment:

Fer­gu­son, IG Group


Con­struc­tion PMI (UK), BRC re­tail sales


In­terim re­sults: leader in nine short years as par­ents snapped up its pouches of or­ganic puréed fruit and veg­eta­bles as a health­ier, more con­ve­nient option to what tra­di­tional brands, such as Cow & Gate, had been of­fer­ing. The over­whelm­ing suc­cess of Ella’s has lead to copy­cats, with Heinz and HIPP both launch­ing sim­i­lar prod­ucts.

Mean­while, par­ents are in­creas­ingly turn­ing to su­per­mar­kets’ own brands of nap­pies or hunt­ing en­vi­ron­men­tally friendly al­ter­na­tives, at the ex­pense of the big brands such as Pam­pers and Hug­gies. On av­er­age, a typ­i­cal nappy takes 500 years to de­grade but brands like Kit & Kin, which was launched by for­mer Spice Girl Emma Bun­ton and busi­ness part­ner Christo­pher Money, uses more eco-friendly in­gre­di­ents. “Par­ents nowa­days are much more aware of the en­vi­ron­men­tal im­pact of bring­ing chil­dren into the world,” says Mr Money.

Experts say par­ents give more con­sid­er­a­tion to their pur­chas­ing de­ci­sions when they are buy­ing for their chil­dren. “Par­ents are look­ing for re­as­sur­ance from a prod­uct, whether it’s to help their child sleep, grow or de­velop prop­erly,” ex­plains Will Hayl­lar at OC&C strat­egy con­sul­tants. “It’s an emo­tional pur­chase based on a pos­i­tive de­sire, or there’s the fear

fac­tor Stage­coach, Monks In­vest­ment Trust

Ser­vices PMI (UK, US and eu­ro­zone), SMMT new car sales


In­terim re­sults: DS Smith

Trad­ing up­date: Ted Baker (right)

AGM: Soft­cat In­terim re­sults: Berke­ley Homes AGM: As­so­ci­ated Bri­tish Foods SOURCE: EUROMON­I­TOR

that if they don’t buy that prod­uct their child could be put in dan­ger,” he adds.

“Peo­ple used to rely on their par­ents’ rec­om­men­da­tion but that has changed with a lot more peer-to-peer rec­om­men­da­tions on Mum­snet and so­cial me­dia,” Mr Hayl­lar adds.

Af­ter more than a cen­tury dom­i­nat­ing the mar­ket for baby sham­poos, lo­tions and tal­cum pow­ders, John­son & John­son is rapidly los­ing share to newer ri­vals. Over the last seven years sales of its baby care brands have de­clined from $2.3bn (£1.7bn) to $1.9bn. Mean­while its grip on the UK mar­ket has slipped from 29pc to 24.4pc, ac­cord­ing to Euromon­i­tor.

The com­pany’s emer­gence as a ma­jor force was an ac­ci­dent; it started pro­duc­ing a tal­cum pow­der in re­sponse to cus­tomer com­plaints about the itch­i­ness of its early med­i­cal plas­ters. The pow­der was soon seized upon as an ef­fec­tive way to re­lieve nappy rash, prompt­ing the launch of its baby pow­der in 1894 be­fore ex­pand­ing to soap, oils, lo­tions and de­vel­op­ing its fa­mous “no more tears” sham­poo in 1954.

But sales of its her­itage prod­ucts are slid­ing. Rosie Lovett, a 33-year old mother of two, said she had stopped buy­ing John­son & John­son prod­ucts in favour of Burt’s Bees and up­mar­ket skin­care Aure­lia. “It’s more nat­u­ral and it might be me fall­ing for the mar­ket­ing but it seems to be bet­ter for her dry skin. I care more about my baby’s prod­ucts than mine,” she adds.

Bosses at the Amer­i­can gi­ant have wo­ken up to the prob­lem and pub­licly ad­mit­ted that John­son & John­son is los­ing out to par­ents buy­ing “pre­mium, nat­u­ral-type brands”.

“It’s a mas­sive is­sue for the whole in­dus­try and the way they re­spond to grow­ing con­cern about what’s in their prod­ucts,” said Neil Sut­ton at PWC. “The chal­lenge the big brands face is how they can bring prod­ucts to mar­ket as quickly.”

The back­lash to­wards chem­i­cal-


‘Par­ents are look­ing for re­as­sur­ance from a prod­uct, whether it’s to help their child sleep, grow or de­velop prop­erly’

heavy prod­ucts has prompted the con­sumer ti­tan to re­for­mu­late its 124-year-old sham­poo in a rad­i­cal move to win back fam­i­lies. The new for­mu­la­tion, which will hit Bri­tish shops in Fe­bru­ary, has stripped out 50pc of the in­gre­di­ents that were pre­vi­ously used. It was only in 2014 that John­son & John­son re­moved formalde­hyde – used to pre­serve dead an­i­mals – from its US range.

“It’s ex­tremely dif­fi­cult to re­for­mu­late,” ex­plains David Mays, a se­nior spokesman at John­son & John­son. “We had a prom­ise and his­tory with fam­i­lies who have been us­ing our baby sham­poo since the Fifties. We had to meet or ex­ceed their ex­pec­ta­tions of how it foams, and smells and looks.”

But while John­son & John­son openly ac­knowl­edges par­ents’ en­thu­si­asm for nat­u­ral prod­ucts it is also at­tempt­ing to sab­o­tage its new ri­vals by fu­elling dis­trust of nat­u­ral prod­ucts. The com­pany re­cently used its con­nec­tions with the Royal Col­lege of Mid­wives to give a pre­sen­ta­tion warn­ing about the dan­gers of nat­u­ral brands by ar­gu­ing that of the 26 known al­ler­gens, 86pc of those are nat­u­ral in­gre­di­ents.

John­son & John­son has also be­gun tar­get­ing spe­cific ri­vals, sin­gling out the use of tan­ger­ine oil in prod­ucts made by Bri­tish brand Childs Farm’s, which Mays claims is made up of 27 dif­fer­ent chem­i­cals.

“Some­one could grav­i­tate to a more nat­u­ral prod­uct but be ex­pos­ing their child to an al­ler­gen,” he ar­gues. Childs Farm founder Joanna Jensen, a for­mer in­vest­ment banker, isn’t im­pressed by its move to mus­cle out smaller ri­vals.

“It’s to­tal b-------”, she says of the tac­tics. “They are not happy with us be­cause we have stolen their mar­ket share. They are com­pletely profit driven. But as a par­ent why would you choose to put chem­i­cals on your baby’s skin?” she asks.

“I know they are go­ing af­ter us. We have been in this mar­ket for four years and now we ac­count for 20pc of the re­tailer’s sales in baby care.”

The com­pany, which has bagged shelf list­ings with all the su­per­mar­kets, Boots, Su­per­drug, and is about to launch in Aus­tralia, is on track to make £14m in sales this year. The new baby care brands will have to hope they are just as suc­cess­ful with the next gen­er­a­tion too.

A pub­lic­ity shot for Emma Bun­ton’s nappy com­pany Kit and Kin, which claims to use more eco-friendly ma­te­ri­als than the big brands

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