The Evolution of the Baby Food Industry, 2000-2008

Abstract

In 2000, the Federal Trade Commission (FTC) prevented the merger of the second and third largest baby food manufacturers in the United States. Since the blocked merger, the landscape of the baby food industry has evolved significantly. All of the major brands of jarred baby food have undergone changes in ownership. The relevant product market may have slightly broadened beyond jarred baby food. Market concentration has increased, although prices have not. Gerber increased its market share from 71-72 to 73-80 percent. Beech-Nut's market share slightly declined from 13 to 11-12 percent, whereas Heinz's former brand, Nature's Goodness, declined from 13 to 2 percent. With no substantial entry, only Gerber and Beech-Nut currently have double-digit market shares. Also, although the average price of baby food has fluctuated over the years, prices in 2008 were the same as prices in 2000, after adjusting for inflation and changes in the composition of consumption. In terms of pricing, the market does not appear to be much different in 2008 than it was in 2000.

Keywords: L40, L44, L66