Although the vitamins and dietary supplements (VDS) industry is increasingly focused on the growing elderly population with more products targeted towards healthy aging, there is a tremendous opportunity in the paediatric and prenatal supplements market that should not be overlooked. Paediatric and prenatal supplements are increasingly used to optimize healthy physical and mental development from conception all the way through adolescence. Globally, paediatric VDS and pregnancy multivitamins continue to outpaced the total VDS market. Together, retail value sales of these products grew 34% between 2008 and 2013 to reach US$4.7 billion worldwide. Market outperformance is expected to continue as the understanding of the importance of proper nutrition on healthy development improves, along with increasing disposable incomes and a shift in the parental demographic.
Global Year-On-Year Retail Value Sales Growth by Total VDS, Paediatric VDS and Pregnancy Multivitamins 2008-2013
Source: Euromonitor International
Demand Overcomes the Paediatric Population Slowdown
Globally, the target population for paediatric and prenatal supplements is declining proportionally relative to other demographics. Birth rates around the world have dropped steadily. Between 1983 and 2013, the number of births per 1,000 people declined 30% from 28 to 19. Also, the global population of 0-to-12 year olds continues its downturn, currently making up just 22% of the total population or 8 points lower than in 1983. Despite these declines, the paediatric and prenatal supplements market is on the rise. Since 2008, average retail value sales of paediatric VDS and pregnancy multivitamins have increased yearly by 5% or more per live birth. The increase in average spend per child is driven by several scientific, consumer and market trends that have more than offset the unfavourable population development.
It has long been common knowledge that nutrition is essential to a child’s development, but modern scientific advancements have allowed for much deeper insights, especially regarding prenatal development. One of the most significant recent findings demonstrates how a women’s diet, including right at the time of conception, can alter a baby’s genes permanently. In the study “Maternal nutrition at conception modulates DNA methylation of human metastable epialleles” published by Nature Communications in April 2014, a team of scientist found that nutrition can impact whether or not certain genes are activated in early embryonic development. More specifically, the deficiency of several B vitamins and nutrients associated with them is correlated with lower levels of methylation in a set of six genes. While the subsequent impact on health later in life was not examined, the study supports the extent to which diet influences development. Currently, almost all obstetricians in the US recommend that pregnant women take prenatal vitamins to support healthy growth and reduce the chances of birth defects. As the public becomes more knowledgeable about the specific impact of nutrition on development, compliance, and in turns sales, will continue to improve.
Another important factor influencing sales of paediatric and prenatal supplements is the general shift in the number of children per family. Typically, parents are moving away from large families and are having fewer children. Global fertility rates have decreased 30% since 1983 to 3.0, with Australasia, Eastern Europe, North America and Western Europe all below 2.0. While may seem detrimental at first glance to paediatric and prenatal supplements sales, it may have actually opened up the market for parents who can now focus on ensuring the proper nutrition for fewer children. Though perhaps crass to say quality over quantity, parents are increasingly determined to optimize development, which they believe will translate to future potential, among the fewer children that they are having.
Additionally, improving economic conditions and growing disposable incomes are improving the accessibility of paediatric and prenatal supplements. Controlling for inflation, annual disposable income worldwide grew 3% between 2009 and 2013. Since many parent’s prioritize the needs of their children, especially regarding health and wellbeing, a portion of the increasing disposable income is being used on paediatric VDS or prenatal multivitamins as seen through increased retail value sales per child.
Demand Spans Regions
The increasing demand for supplements targeted towards children is generally consistent across the globe. All regions, except Latin America, have experienced solid gains in retail value sales of both paediatric VDS and pregnancy multivitamins.
Regional Paediatric VDS and Pregnancy Multivitamins Retail Sales (RSP) and Growth 2008-2013
Source: Euromonitor International
China is far and away the world’s largest paediatric VDS market, reaching retail sales of over US$1 billion in 2013. As a whole, Chinese parents are very enthusiastic about boosting their children’s fitness, both mentally and physically. However, growing concerns about supplement safety will be a double-edged sword as some consumers will spend more on these products for the most recognized and trustworthy brands, while other may forgo them and opt for improving nutrition through diet. Though China is an enormous market for paediatric VDS, other countries in Asia Pacific are quite small. Markets like South Korea and India, which have low overall sales but are fast growing, present the strongest opportunities in the region. Paediatric VDS retail sales in South Korea grew by a CAGR of 14% over 2008-2013 to reach sales of US$190 and retail sales in India grew by a CAGR of 23% to reach sales of US$50 million. On the other hand, the ratio of pregnancy multivitamins retail sales to paediatric VDS sales in Asia Pacific is smallest of all regions. Given the demand for the supplements, Asia Pacific is a tremendous perspective market for pregnancy multivitamins, which have already grown by a CAGR of 12% in retail value sales over 2008-2013.
North America is the world’s second largest market for paediatric VDS and largest for pregnancy multivitamins, and the shifting parental demographic in the region will continue to support growth. According to the US department of Health & Human Services, teen pregnancies rates have declined steadily over the past 20 years. On the other hand, the US Fertility Forecast from Demographic Intelligence reports that share of births to more affluent and better educated women is on the rise. Demographic Intelligence, for example, highlights that the share of births to women with at least some college education grew to 58% in 2013 compared to 50% in 2007. As a result of these demographic shifts, parents in North America have greater means to support their children’s development with paediatric and prenatal supplements.
The Western European market is the slowest moving globally nearly across consumer health categories as a result of continued economic woes. While the retail value sales in the overall VDS market have declined yearly since 2011, paediatric VDS and pregnancy multivitamins grew by a CAGR of 3% and 4%, respectively, over 2008-2013. This emphasizes the value that Western European parents put on proper nutrition for their children even over their own needs.
Latin America also presents a strong opportunity for those paediatric supplement manufacturers looking to expand their reach. While regional retail value sales of paediatric VDS posted declines over 2008-2013, this was mostly driven by Mead Johnson’s products being pulled from key markets like Mexico. Conversely, retail value sales of pregnancy multivitamins nearly doubled during this time period to US$201 million. The demand for paediatric VDS is growing and a competitive hole has been left by Mead Johnson to be filled in.
A Logical Extension for Current VDS Providers
There are a number of leading VDS companies that are absent or underrepresented in the paediatric and prenatal supplements market. Sanofi, for example, is a top 10 provider of VDS globally with sales reaching over US$1 billion in 2013. However, the company ranks 46th overall in paediatric VDS with retail sales of just US$10 million. Herbalife Ltd and Taisho Pharmaceutical Co Ltd are also lacking in the children’s market, ranking fifth and eighth globally in total VDS, respectively, and 19th and 30th in paediatric VDS.
Expanding their presence into paediatric supplements is a logical strategy, especially since many of these companies can leverage their current manufacturing and distribution networks instead of building from the ground-up. New entrants would strongly benefit from marketing support, particularly since eager parents will not be overly difficult to convince and children are relatively easy to reach. Straight forward and informative product packaging is essential for prenatal vitamins, while appealing to children through popular cartoon characters and enjoyable formats, like gummies, will win them over and ensure compliance.
Source: Images of a drugstore shelf in the US showing pregnancy multivitamins and paediatric VDS
Future Growth
All signs point towards sustained growth for paediatric and prenatal supplements as scientific improvements highlight the importance of nutrition, parents continue to prioritize the healthy development of their children and as the economic environment rallies. As with adult VDS, there is controversy over the necessity of paediatric supplements and their actual influence on health. For example, the Journal of the American Medical Association (JAMA) recently published a study questioning the impact of prenatal DHA (docosahexaenoic acid) supplementation on development (Four-Year Follow-up of Children Born to Women in a Randomized Trial of Prenatal DHA Supplementation, May 2014). However, parents will continue to spend on what they perceive will benefit their children, which translates to huge market potential. Global per household spend on paediatric VDS is expected to rise 17% between 2013 and 2018 with the worldwide sales reaching US$4.4 billion. If pregnancy multivitamins follow suit as expected, retail sales should exceed US$1.7 worldwide in 2018.
Global Paediatric VDS Retail Value Sales 2013-2018
Source: Euromonitor International