Baby Bloom or Baby Gloom: Prospects and Challenges in Baby and Child-specific Products

Strategy Briefing

About This Report

Sep 2014

Baby and child-specific products was the second fastest growing category in total beauty and personal care in 2013. It remains something of a niche in an ageing world. Disposable incomes are rising while birth rates are falling and women are giving birth later, creating a challenging environment for manufacturers of baby and child-specific products. Opportunities remain in baby and child-specific skin care, but availability and awareness remain issues in emerging markets.

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Baby Bloom or Baby Gloom: Prospects and Challenges in Baby and Child-specific Products

Baby and child-specific products grow strongly

In 2013, baby and child-specific products was the second fastest growing category in total beauty and personal care. Only deodorants registered faster growth. In current terms the 7% growth was largely due to Brazil and China.

Low birth rates create a challenging environment

Despite its rapid growth the category still represents only 3% of the total beauty and personal care market. Low birth rates across both emerging and developed countries will impact future growth. Encouraging government schemes in countries like Germany and Russia are however, expected to boost spending on baby and child-specific products.

Asia Pacific and Latin America shape future potential

While growth in baby and child-specific products has been sustained across all regions, China and Brazil will generate 66% of the total absolute growth between 2013 and 2018. China’s change in one-child policy to boost the category China is expected to contribute US$1.5 billion to baby and child-specific products' US$3.5 billion absolute growth between 2013 and 2018. Recent changes in legislation allowing families where one parent is a single child to have two children may accelerate growth further.

Turkey, Russia and Saudi Arabia – the next frontier Beyond China and Brazil, Turkey, Russia and Saudi Arabia are emerging as the next growth frontiers, with rising disposable incomes boosting demand and per capita spending.

Local players present challenges for global leaders

While Johnson & Johnson’s global lead is undisputed, local competition in Brazil and China has presented certain challenges. The company trails behind local company Natura in Brazil, while in China regional player Pigeon and local player Prince Frog have been gaining share.

Premiumisation provides opportunity

While private label remains important in baby and child-specific products, with over 11% of the market, lower birth rates and thus lower volumes, increases the need for higher margins. Premiumisation and even luxury is a niche that is growing in baby care, echoing childrenswear, where luxury and premium brands are expanding to baby lines. The rise of the “mini me” phenomenon combined with increasing disposable incomes, indicate that China, Turkey, Russia, UAE and Saudi Arabia are promising markets for premium brands.

Local brands rise in emerging markets

Johnson & Johnson remains the leading player globally in baby and child-specific products. However, perceptions of local brands are changing and regional players, like Pigeon in Asia Pacific, and local ones, such as Natura in Brazil, Prince Frog in China and Green Finger in South Korea, are shaking up the competitive landscape, with Johnson & Johnson having to work harder to maintain its market leadership.

What this report includes

  • Top-level strategic analysis of how major consumer trends will influence global markets
  • Consumer insight
  • Impact across all relevant consumer markets
  • Unique graphics and case studies
  • Key market snapshots
  • Accompanying presentation to synthesise main findings

Why buy this report

  • Identify factors driving change now and in the future
  • Understand motivation
  • Forward-looking outlook
  • Briefings and presentation should provoke lively discussion at senior level
  • Take a step back from micro trends
  • Get up to date estimates and comment

Introduction

Scope
Key findings

Baby and Child-specific Products Overview

Baby and child-specific p roducts continue to grow…
…But the category remains a niche within total beauty
Baby wipes dominate; baby and child-specific skin care blooms

Key Industry Geographical Hotspots

Women’s empowerment results in lower birth rates
L ow global fertility rates: One of the industry’s main challenges
Emerging markets surge ahead in baby and child-specific products
Supermarkets/hypermarkets dominate across regions
India, Indonesia and Philippines: Asia Pacific’s promising markets
Asia Pacific: Skin care dominates while wipes thrive
China’s relaxation of the one-child policy should boost industry
Latin America: S trong growth frontier for baby and child-specific products
Brazilians expected to be spending over US$75 per child in 2018
Western Europe: The home of the biggest per child spenders
Postponing motherhood leads to higher spending per child
Turkey, Russia and Saudi Arabia: The next growth frontiers

The Competitive Playground

Johnson & Johnson Inc loses ground
Parents choose local players in fast-growing markets
Key innovation hotspots within baby and child-specific products
Organic offerings drive innovation in mature markets
Fun and health dominate innovation in the US
Product segmentation leads innovation in China

Key Opportunities for Growth

Future drivers in baby and child-specific products
Demand for gentle formulations favours natural baby skin care
Baby fragrances: A niche sub-category
Opportunities for premium baby care in emerging markets
Internet retailing: The fastest growing channel in all regions
Private label remains concentrated in baby wipes

Major Category Highlights

Baby toiletries maintain the strongest growth in the industry
Adult market used to identify future potential in the industry
Baby wipes: A multipurpose sub-category

Summary and Recommendations

Key demand factors affecting the market for the future
Future growth trends in baby and child-specific products
Key geographical highlights to 2018
Opportunities and recommendations