Product launches in baby and toddler categories have grown by 5% annually in the last five years, according to data from Innova Market Insights. Data suggests a steep growth in product launches with a plant-based claim, growing 62% from 2018 to 2022.

Nutrition Insight sits down with Harri Kallionen, Valio’s SVP, and Emmi Martikainen, the company’s head of product development in powders and baby foods, to discuss results in the market for infant nutrition.

What trends do you see in the market for dairy and infant nutrition? 
Kallioinen: We have been in the consumer product market for over 100 years. Our national market and traditional dairy products are crucial to us and we have many innovations among them. During the last few years, we have seen that plant-based products have come to the same shelves and should be developed further. 

At the same time, the market for dairy products is not growing anymore in many Western markets, at least not in our home market. But on the other hand, food and dairy product markets are increasing in other parts of the world. Globally, there is a need for new products. We can use our expertise and dairy product knowledge when developing new ingredients for different applications. 

Harri Kallionen, Valio’s SVPIt’s quite evident that we need to be sustainable in all our actions. There is a market for dairy products, which are produced in more environmentally friendly ways. 

We aim to become carbon neutral by 2035, covering the whole value chain, from the fields to our factories. We know that a significant part of CO2 emissions happens at the beginning of the value chain.

Martikainen: Companies in this sector, including Valio, aim to develop formulas closer to the golden standard of human breast milk. 

At the same time, we see overarching food trends, such as growing demand for sustainability, holistic health and convenience. For example, in Finland, we offer a lot of ready-to-feed infant formulas. Around 90% of Finnish mothers prefer these to powder formula as they are a more convenient option. 

Holistic well-being is a significant trend and it will be more important in different categories, including special nutrition, like infant formula. 

Overall, we see a growing need for better-for-you products -- for example, increasing protein in your diet without compromising taste and texture. Moreover, special nutrition, healthy aging and having an active lifestyle are areas we’re looking into for product development.

How has the market changed compared to a few years ago? 
Kallioinen: The world is quite different than it used to be five years ago. First, the COVID-19 crisis made it challenging to obtain certain ingredients used in producing dairy products. 

And now, the war started by Russia is also shaping the world in a new way. The world is much more unpredictable. So we don’t know what the market price of commodity products will be, for example. Of course, it affects the value of our products and the availability of some ingredients. 

Infant nutrition product categories are heavily regulated, and food safety is becoming even more important.At the same time, changes also open new opportunities. For example, demand for dairy products is growing in other parts of the world. Developing products that meet the needs of different age groups is another opportunity, and I see plant-based food as an opportunity for us. 

Food safety requirements and regulations for baby food are also becoming more strict. Twenty years ago, I don’t know whether anyone knew about Cronobacter bacteria that have caused contamination in IMF products, for example, in the US infant formula crisis. Legislation does not require Cronobacter to be monitored in foods other than Infant milk formula. 

Although the US crisis did not affect us directly at the time, since we are not present in this market as an infant milk producer, it might have consequences in the future in terms of legislative changes. 

Martikainen: Regulation is indeed becoming more strict. Although food safety has always been an essential aspect of baby food products, as we can measure more and know more about microbes, we need to be more careful. We need to make risk assessments to determine which ingredients and raw materials we can use, audit all our suppliers, analyze water quality, updat packaging materials and ensure these meet the standards. 

How does Valio develop new products? 
Martikainen: Infant nutrition product categories are heavily regulated, and food safety is becoming even more important for these products. We are also certified to different international standards. This provides us with an operational framework to develop new products. 

Emmi Martikainen, Valio’s head of product development in powders and baby foodsValio invests heavily in R&D, allowing us to develop new products. For example, we have a sensory research group, three technology research groups and we do nutrition research. For example, clinical studies and research projects can give us insights or ideas for future product development. 

The Valio mindset is positive toward innovation, and we’re also expected to innovate. We are a large food company in Finland and offer a wide range of products in the national market. This gives us the confidence to try new things. 

Although we are a large company in the Finnish food sector, we are still relatively small and have an informal corporate structure. This allows for lots of face-to-face collaboration in-house between different departments, such as marketing or sales. 

wher does Valio get inspiration for new products? 
Kallioinen: If we look back into history, we have utilized topics or issues quite well that can be seen as a threat to producers. For example, we have been on the lactose-free market for at least 40-45 years – we were the first to produce this. 

Current health issues are also not new. High cholesterol and blood pressure have been topics since the 80s, and many products have been developed to address these. Salt reduction has already been done in the 90s as well. 

Martikainen: Sometimes timing is essential in new product development – you can be too early with some ideas. For example, when I worked in cheese product development at Valio, we had this very low-sodium cheese that didn’t take off. But now, salt and sugar reduction is a significant trend, and I think more and more products are coming into marketing those categories and those aspects. 

Customer interaction is a valuable source of ideas for product development, for example, if they are looking for specific products or have particular product needs. We also follow trends, technological developments, legislation and the evolving market. 

What are the benefits of dry blending, and what products does Valio offer?
Kallioinen: Valio Prime SMP is a new, ultra-pure infant-grade skimmed milk powder (SMP) for producing dry-blend IMF. It is made in a spotless and new production line to fulfill all the requirements for dry blend applications for infant formula.

Dry blending of IMF allows for smaller batch sizes and tailor-made formulas.Dry blending process for infant milk formula production is often a more feasible option compared to wet blend. Dry blending allows for smaller batch sizes so that manufacturers can adapt to different product needs and create tailor-made formulas. 

Also, dry blending allows companies to use ingredients not tolerant to heat treatments. These heat treatments, which safeguard food safety in wet blending, do not occur in dry blended products. This allows manufacturers to add different ingredients to get closer to the golden standard of mother milk, which contains many components either not present in cow’s milk or only in insufficient concentrations. 

At the same time, there are many different kinds of infant milk formulas, such as unique formulas for allergic babies or other issues that infants may have. All this means that the amount of SKUs (Stock Keeping Units) can be pretty significant. 

On the other hand, dry blending also requires that the ingredients used are of high quality, the quality control must be much tighter and especially the production facility must be very clean. 

Moreover, water use in production facilities should be minimized as much as possible because when there is water, it allows bacteria to grow and access the processing.