“Fever, rash, joint pain, and conjunctivitis (red eyes). The illness is usually mild, with symptoms lasting from several days to a week.” This is the description that the US Centers for Disease Control and Prevention gives to the Zika virus. It is a broad and seemingly innocuous description of a virus that currently has media and governments panicking throughout the Americas. Welcome to the world of globalisation where a sneeze snowballs into a full on virus, and travel, economics, governmental powers, and medicine all collide to create the perfect storm. The Zika virus has governments throughout the Latin American region, including Brazil, Colombia, Ecuador and Jamaica, suggesting that their citizens hold off getting pregnant for several months, while the government of El Salvador has suggested that women wait until the year 2018 to get pregnant. What effects will the Zika virus have on birthrates, and by extension, sales of nappies/diapers/pants in Latin America? While there is no straight forward answer to this question, we can look at the issues surrounding the current situation in Latin American markets in order to better understand what the possible outcomes are.
Birthrates already in decline in Latin America?
According to Euromonitor International’s population forecasts, the birth rate in Latin America is expected to decline at a CAGR of -1.4% over the 2015-2020 forecast period. This downtrend in the birthrate can be attributed to a number of reasons including, more available information about family planning, the increasing acceptance and usage of contraceptives, and economic downtrends that play a part in people holding off on starting their families.
Many have speculated that this downward trend in population growth will only be exacerbated by the fact that the Zika virus has been linked to microcephaly, a condition that occurs in newborns where the brain is not fully formed and therefore the head is smaller than what is considered normal. It is important to state that there is no absolute scientific consensus that there is a correlation between microcephaly and the Zika virus. However, the New England Journal of Medicine published a study on February 10th, which made the case for a stronger link between Zika and microcephaly.
Note: The birth rate is the annual number of live births per 1,000 population
Postponement of pregnancy – The factors
What are the consequences if women choose to postpone birth in Latin America? The fact of the matter is that the birth rates have been falling across the board and growth rates for nappies/diapers/pants are forecasted to be much slower over the next five years. For example, Brazil, ground zero for the Zika virus in the Western Hemisphere, is forecasted to see birth rates continue to fall at a CAGR of -1.4% over the 2015-2020 period, while volume sales of nappies/diapers/pants will increase at a CAGR of 2% over the same period. This is a far cry from the 6% volume CAGR recorded over the 2010-2015 review period. Education on family planning, the increasing availability of contraceptives, and the uncertain economic situation within Brazil, all play a part in this environment of falling birth rates and slower nappies/diapers/pants volume growth throughout the country.
Brazil - Nappies/Diapers/Pants, Retail Volume CAGR %
There are also socio-economic factors that surround the Zika virus which play a large part in a country such as Brazil. While the virus has travelled throughout Latin America and has even made its way up North with a few cases in the US, it predominately affects individuals at the lower end of the socioeconomic scale in Brazil and other Latin American countries. Individuals in cities have smaller families and have been putting off having children for educational, professional, and economic reasons for several years. This is not the case in the rural areas of countries such as Brazil, which have disproportionally been affected by the virus. Individuals who live in these rural areas tend to be less economically well off, have larger families, and do not have the best access to medical care. It is important to understand how the virus affects families on different levels of the socioeconomic scale in order to determine future population growth and to see who the virus is affecting the most.
Worst case scenario
Clearly the Zika virus affects populations in a negative way. Governments are scrambling to provide their populations with literature and medical care, and to incentivise the pharmaceutical industry to come up with a vaccine. However, what is the worst case scenario that could occur if the Zika virus was unable to be contained and people plan to postpone their pregnancies for a longer period of time? The Atlantic magazine recently ran an article titled, “A Country Without Babies”, addressing the issue of postponing birth throughout the Latin American region. Jose Miguel Guzman, a former demographer at the United Nations and now with ICF International, did not seem too worried in regards to the Zika virus lasting one or two years, mentioning that “populations have a way of boomeranging back when temporarily depressed by a war, epidemic, economic disaster, or some other shock to the system.” However, he expressed more concern should the epidemic last more than five years, stating, “If the Zika epidemic lasts five years or more, however, the calculus could change. In that (very hypothetical) scenario, a significant portion of the women who postponed getting pregnant during the health crisis will be over the age of 35, when pregnancies carry a higher risk, and some of these women will not have the option of having more kids. That drop in the birth rate might not be cancelled out by a subsequent rise, leading to a substantially smaller generation than otherwise would have emerged.” One does not need to be a demographer to understand the resulting structural and social problems that could occur from a rapid decrease in the population. Many of these Latin American countries where the Zika virus has infected a growing number of the population are heavily dependent on younger generations in order to provide for the family. The fact that a much smaller sized generation could come out of this will have long term consequences for these societies.
Manufacturers must be vigilant and willing to help
So what should manufacturers of nappies/diapers/pants in Latin America do in regards to the Zika virus? While it may seem that the Zika virus is a much bigger problem than one consumer goods industry can handle, manufacturers of nappies/diapers/pants must keep a close eye on the situation to better understand how their consumer base may be affected over the next two to five years. Additionally, they should look to join the fight against Zika through educational means or even by working with governments in order to further preventative methods. By acknowledging the fact that the population may change as a direct result of the spread of this virus, manufacturers can prepare to be agile in these markets when it comes to supply of their products.