A baby food production business produces and sells different types and flavors of baby foods or formula. Baby food products include milk powder, cereals, snacks, and different ready-to-drink fresh fruits and vegetable juices. Based on product type, the milk formulations segment dominated the global baby food market in 2019, accounting for around half of the overall market revenue
Statistics have it that the global baby food market size was valued at $67.3 billion in 2019 and is projected to reach $96.3 billion by 2027, growing at a CAGR of 6.0% from 2022 to 2027.
Steps on How to Start a Baby Food Production Business
Table of Content
Conduct Market Research
Conducting market research before starting any business is key to the success of the business hence you must not open a baby food production business without conducting market research. This is because market research provides critical information about your market and your business landscape. It can tell you how your business is perceived by the customers and clients you want to reach.
It can help you determine who and where your customers are, and which customers are most likely to purchase baby food from you. Thorough market research will help you understand how your target customers think and adapt to their needs to turn them into regular customers and brand advocates.
a. Who is the Target Market for Baby Food Production Business?
- Small Grocery Retailers
- Health and Food Retailers
- Nursing mothers
Please note that the target consumers of commercially-available baby food range from infants (babies aged 6 to 12 months) to toddlers (children up to three years old).
b. Is Baby Food Production Business a Profitable Business?
Yes, the baby food production business is very profitable. The market is expected to grow at a CAGR of 9.8% and is anticipated to reach around USD 110.26 Billion by 2026.
c. Are There Existing Niches in the Industry?
Yes, there are existing niches when it comes to the baby food production business. Here are some of them;
- Dried baby food
- Milk Formula
- Prepared Baby Food (Homemade Baby Food)
- Organic Baby Food
d. Who are the Major Competitors?
- Perrigo Company Plc
- Mead Johnson & Company LLC
- Abbott Laboratories
- Hero Group
- Bellamy Organics
- Hain Celestial Group, Inc.
- Campbell Soups
- Friesland Campina
- Moringa Milk Industry, Inc.
- Pfizer Inc.
- Tiger Brands
- Geber Products Company
- JH J Heinz
- Hero AG
- Wakodo Co, Ltd.
- Synutra International
- SMA Nutrition
e. Are There County or State Regulations or Zoning Laws for Baby Food Production Business?
Yes, there are county and state regulations and zoning laws for baby food production businesses in the United States. Please note that the Food and Drug Administration (FDA) sets the federal Food Code, but doesn’t oversee individual baby food production businesses.
Instead, the various states use the Food Code as the basis for their food codes. They may adopt its rules, interpret them differently or set their own rules. Please note that in the United States, you are required to follow your own state’s food service code. Visit the FDA website for a list of food service codes by state.
f. Is There a Franchise for Baby Food Production Business?
No, there are no franchise opportunities for the baby food production business.
g. What Do You Need to Start a Baby food production business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Production facility
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Equipment and Machines
- Startup Capital
Memorable Baby Food Business Names
- Star Babies© Baby Food Production Company, Inc.
- Lil’ One™ Baby Food Company, LLC
- The Future© Baby Food Production Company, Inc.
- Happy Kid® Baby Food Company, Inc.
- Teddy Bear™ Baby Food Company, Inc.
- Grower™ Baby Food Production Company, LLC.
- Brown Masteries© Baby Food Production Company, LLC
- Baby’s Delight® Baby Food Company, Inc.
- Green Label© Baby Food Company, Inc.
- Waffle© Baby Food Company, Inc.
- Young Champ® Baby Food Company, LLC
- Ryan Townsend® Baby Food Company, LLC
- Red Flowers™ Baby Food Company, LLC
- Orange Ribbon© Baby Food Company, Inc.
- Venus Cape® Baby Food Production Company, Inc.
- Food Signature™ Baby Food Company, Inc.
- Viva™ Baby Food Production Company, Inc.
- Queensland© Baby Food Company, Inc.
- Babies House® Baby Food Company, LLC
- Shantel Logan™ Baby Food Company, Inc.
Register Your Business
a. What Type of Business Structure is Best for Baby Food Production Business?
When it comes to starting a baby food production business, you have several options when it comes to the business structure, but the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Baby Food Production Business?
- General Business License
- Health and Safety Permit
- Food and Drinks Handlers’ License
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Baby Food Production Business?
You don’t need any certifications to open a baby food production business.
e. What Documents are Needed to Open a Baby Food Production Business?
- Business and Liability Insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering opening a baby food production business, you will need to file for intellectual property protection or a trademark to protect your formula and brand.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Baby Food Production Business?
The cost required to open a baby food production business may vary significantly and it could be high, moderate, or low. For example, you can start a homemade baby food production business with less than $5,000 and at the same time, you can start a standard baby food production business with a robust distribution network and over a dozen full-time employees with over $1 million.
b. What are the Costs Involved in Starting a Baby Food Production Business?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $4,300.
- Marketing, Branding and Promotions – $3,000.
- Business Consultant Fee – $2,500.
- Insurance – $5,400.
- Rent/Lease – $175,000.
- Other start-up expenses include stationery ($500), and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $30,000
- Start-up Inventory – $100,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Production Machines and Equipment – $200,000
- Distribution Trucks – $$45,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Baby Food Production Business?
- The size of the baby food production business
- The choice of location
- The required licenses and permits
- The type of facility
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the baby food
- The cost for furnishing and equipping the baby food production facility
- The cost of insurance
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost for the grand opening of the business
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
No, it is not compulsory to build a new facility for your baby food production business, but if you have the required finance, it will pay you to build your own facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of a Baby Food Production Business?
- Supplies (inventory expenses)
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees.
f. What is the Average Salary of your Staff?
- Chief Executive Officer – $75,000
- Production Manager – $45,000 Per Year
- Food Nutritionist – $42,000 Per Year
- Quality Control and Quality Assurance Manager – $42,000 Per Year
- Human Resource Manager – $40,000 Per Year
- Accountant – $35,630,000 Per Year
- Machine Operators – $28,000 Per Year
- Distributors – $26,000 Per Year
g. How Do You Get Funding to Start a Baby Food Production Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Baby’s Delight® Baby Food Company, Inc. is a world-class and licensed food production company with a bias in baby food production. It will be based in the outskirt of Santa Fe, New Mexico – United States. We have done our market research and feasibility studies and we were able to secure 50 hectares of land to start our baby food production plant.
Our baby food production plant is going to be a standard commercial company hence will be involved in producing baby food for the United States market and other countries of the world.
b. Products and Service
- Dried baby food
- Milk Formula
- Prepared Baby Food
- Organic Baby Food
c. Mission Statement
Our mission is to establish a standard baby food brand that will favorably compete with leaders in the industry. We want to build a business that will be listed amongst the top 20 baby food brands in the United States of America.
Our vision is to build a baby food production business with a distribution network all across the United States of America and Canada.
d. Goals and Objectives
The goals and objectives of a baby food production business are to produce different flavors and types of baby food for babies and retailers.
e. Organizational Structure
- Chief Executive Officer
- Production Manager
- Food Nutritionist
- Quality Control and Quality Assurance Manager
- Human Resource Manager
- Machine Operators
a. SWOT Analysis
- Ideal location for a baby food production business
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Access to ingredients and supplies.
- A reliable, clean, healthy, and efficient method of preparing baby food.
- Financial constraints may restrict the publicity and branding of the business
- A new business that will be competing with well-established baby food production companies in the city.
- Inability to retain our highly experienced and qualified employees longer than we want during the teething stage of the business.
- A rise in the number of babies within our market space
- The increasing incidence of lactating issues in infants has influenced the increased adoption of milk-based baby food products. Breast-feeding problems in women are the major driving factor for the market.
- Online market, new services, new technology, and of course the opening of new markets.
- The arrival of a new baby food production business within our market space
- Steady wage expenses
- Economic uncertainty
- Liability problems
- The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Baby Food Production Businesses Make Money?
Baby food production businesses make money by selling the following products;
- Different types and flavors of baby foods
c. Payment Options
- Payment via bank transfer
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Introduce your baby food production business by sending introductory letters alongside your brochure to retailers, nursing mothers, motherless babies’ homes, maternity homes, and other key stakeholders throughout the city where your baby food production business is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business to give your business an online presence
- Directly market your products.
- Engage in roadshows in targeted communities from time to time to promote your baby food
- Join local baby food production business associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Product?
Well, you should plan to charge between $1.5 and $6.50 per 900g of baby food, or $24.99 for 24.
b. How Much Profit Do Baby Food Production Business Owners Make a Year?
It depends, but available reports show that on average, within the industry, a small to medium-sized baby food production business can earn anywhere from $80,000 to over $150,000 in a year in personal income.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the baby food production business
- The location the baby food production business is covering
- The management style of the baby food production business
- The business approach of the baby food production business
- The advertising and marketing strategies adopted by the baby food production business
- The number of years the baby food company is in business
d. What is the Profit Margin of a Baby Food Production Business?
Experts recommend adding a 40 percent profit margin to baby foods. But it is important to state that the average baby food production company sells their baby foods with a profit margin of 25 to 30 percent.
e. What is the Sales Forecast?
Below is the sales forecast for a baby food production business. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $950,000
- Second Fiscal Year: $1.5 million
- Third Fiscal Year: $3.5 million
Set Up your Shop/Office
a. How Do You Choose a Perfect Location for Baby Food Production Business?
- The demography of the location especially as it relates to babies and nursing mothers
- The demand for baby foods in the location
- The purchasing power of residents of the location
- Accessibility of the location
- The number of baby food production companies, and retail outlets in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Baby Food Production Business?
- Oklahoma City, Oklahoma
- Chagrin Falls, Ohio
- Kaysville, Utah
- Cedar Rapids, Iowa
- Las Vegas, Nevada
- Los Angeles, California
- San Antonio, Texas
- Miami, Florida
- Houston, Texas
- New York City, New York
c. What Equipment is Needed to Operate a Baby Food Production Business?
- Food Processor
- Packaging and Labeling Machines
When it comes to hiring employees for a standard baby food production business, you should make plans to hire a competent chief executive officer (you can occupy this position), production manager, food nutritionist, quality control and quality assurance manager, accountants, machine operators, and distributors.
Launch the Business Proper
In recent times, no baby food production business opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the baby food production business, you will officially inform people in your city that your baby food factory is open for business.
a. What Makes a Baby Food Production Business Successful?
- Choose a good location and production facility to launch the business
- Make sure you produce different flavors and types of baby food (give your customers options)
- Throw a grand party before officially opening the baby food production business
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your baby food production business
- Leverage on all available online and offline platforms to promote your baby food production business
b. What Happens During a Typical Day at a Baby Food Production Business?
- The production facility is open for the day’s work
- Supplies and ingredients are ordered
- Workers go to work to start producing baby food
- Deliveries of orders are made
- Stocks are taken and reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Baby Food Production Business?
- Excellent food production skills
- Excellent customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Work experience in a bakery
- Experience in managing people
- Experience in business administration
- Experience in producing different types of foods and formulas.