Gerber Taking a Lesson From Foreign Babies : Food: In trying to increase its share in the Pacific Rim, the company has had to set aside its notions of what babies eat.
Babies may be babies the world around, but in Japan, they eat “rice with young sardines.” In the Philippines, they go for “strained mango.” And in the pastoral farmlands Down Under, Aussie tots eat “lamb stock stew.”
Those culinary quirks are just a few of the cultural nuances Gerber Products Co. has had to master in launching an aggressive drive into the Pacific Rim. The Michigan-based firm, which dominates the U.S. baby food market with a 70% share, is now looking East as part of a new international strategy.
Gerber first entered the Pacific three decades ago, with licensing agreements in Australia in 1959, Japan in 1960 and the Philippines in 1972. But the company admits that it was “dozing at the switch” in the past and today commands just a 15% market share in Japan, said Michael Cipollaro, president of Gerber’s international division.
Meanwhile, such competitors as Heinz and Nestle were plunging into Hong Kong, Singapore and other Asian markets.
Shortly after Chairman Al Piergallini joined Gerber in April, 1989, he hired Cipollaro to turn things around. Since then, Gerber has begun beefing up efforts in Japan and is expanding into Asia. Deals are in the works to set up manufacturing facilities in China and possibly India, as well as an alliance with a Thai firm to manufacture, market and distribute products throughout Southeast Asia.
The lures: Huge potential markets, including two of the world’s most populous nations, along with affluent consumers in Japan and in the economic tigers of Taiwan, Hong Kong, Singapore and South Korea.
“We were like all other companies initially and figured everyone would like what was American and buy American,” Piergallini said in an interview. “But it is evident that each country not only likes different foods, but also has different feeding habits and practices.”
Take Japan, for instance. The biggest hurdle may be getting mothers to buy prepared baby food in the first place. There, as well as in South Korea, a more traditional society creates pressure for a young mother to stay home and make meals for the family from scratch. Such pressure is particularly acute in extended families, where the grandmother is often the household’s dominant female, according to a Gerber analysis of East Asia markets.
“A good mother is one who makes homemade food for the child,” said Cipollaro.
As a result, he said, Japan’s entire market for ready-made baby food is only $120 million. In contrast, France’s market is twice as large with half the population.
To develop the market in Japan and elsewhere, Gerber is not merely waiting for a change in women’s status. It is positioning itself as an unparalleled expert in the baby food field. Among other things, it is marketing its products as part of a “scientifically based” feeding plan that considers a food’s composition, vitamins, minerals, textures and digestibility in introducing certain foods at certain stages in an infant’s life.
The food containers are actually labeled as “lessons” to add to the authoritative air. Lesson 5, for instance, offers everything from “salmon stew” to “egg and rice” for infants from seven to eight months old.
“The strategy is to demonstrate that Gerber brings to them something they cannot give the baby themselves,” Cipollaro said.
The firm also is adapting its products to the local market. Because the Japanese like freeze-dried products, Gerber has developed that line--even though it bombed when attempted in the United States.
And Gerber is establishing a “council of experts” in Japan and elsewhere in Asia to advise the firm on feeding practices in each country. That step will help give credibility to a firm that may be a household name in the United States but is still little-known in Asia.
Even the advertising is being carefully tailored. The firm produced five ads of babies of different races engaged in different activities: in front of a computer and a piano, playing soccer and football, lifting barbells. Focus groups in Asia showed a clear preference for the computer and piano ads--not to mention the Asian and white babies.
“Clearly in Asia--and this is the Chinese influence first and foremost--the mother was most attracted to the intellectual aspiration approach,” Cipollaro said.
In an analysis of the East Asian market, the firm also identified several other challenges. Perceptions exist that commercial baby food is not fresh or nutritious, which the firm plans to combat with an “all natural” positioning. Its cereal packaging is perceived as inferior, with concerns over spoilage and infestation.
There is confusion over where to shop for baby food, since distribution channels vary depending on the product. Grocery stores may carry the fresh jarred food, while pharmacies carry the freeze-dried, and Gerber hopes to unify both channels. Its Japanese partner, Meidi-ya, is currently working on gaining access to pharmacies in Japan.
In any case, the thrust into the Pacific Rim is part of Gerber’s overall move to develop international markets. It has begun exporting to Eastern Europe and, in just one year, built up Poland as its second-largest export market. (Israel is the largest.)
The firm is currently hiring staff to open another venture in Budapest, Hungary.
“It’s a green field--they’ve never had processed baby food before,” Piergallini said.
The shift overseas comes after he divested the firm of several unrelated businesses--furniture, car seats, even trucking--and directed attention back to its core business of babies. So far, it has begun to pay off. International sales rose 15% and operating profit increased by 59% in 1990.
The target now is to make not only Gerber foods, but also care items and clothing, the undisputed market leader for children from infancy to three years old.
But while the green fields of Eastern Europe beckon, Asia promises the biggest rewards, Piergallini said.
“The Far East has a hell of a lot of opportunity--a lot more people and disposable income,” he said.
