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Baby Care Shows Dynamism in Face of Aging Demographics, Slowing Economies

By: Rob Walker, Euromonitor International
Posted: August 1, 2012, from the September 2012 issue of GCI Magazine.

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The economies of Brazil and China are slowing (Brazil in particular), but consumer confidence remains relatively upbeat. Crucially, despite the aging demographic, there are growing numbers of families entering the middle-class, above all in the northeast and center west in the case of Brazil and in the interior in China. As such, there will continue to be myriad growth opportunities for baby care products among households that have formerly been on the margins of mainstream retail culture.

There will also be attractive opportunities for new business in Russia, where the baby and toddler population is in the midst of a growth spurt. Johnson’s is the dominant baby care brand in Russia with a market share of around 19% in 2011, according to Euromonitor International. However, Pampers and Huggies are likely to increase their investment in Russia over the next five years to build a wider platform for their wipes.

A Mixed Picture in Developed Markets

Among the developed markets, the main growth opportunities for baby care will be in the US and the UK, where the populations aged 07ndash;4 are growing. Upbeat results in these markets will offset projections of a slowdown in Spain, France, Japan, Italy, Greece and Germany, where baby care is exposed to population contraction as well as economic instability.

Beyond baby wipes (the dominant category), the most attractive areas for new investment in baby personal care have been identified as skin care and hair care, which are projected to generate actual global retail growth over the next five years of $1.1 billion and $869 million, respectively. Nappy/diaper rash treatment and baby-specific sun care are each forecast to generate incremental value of around $385 million over the corresponding period as well.

Overall, the growth prognosis for baby care looks good. The key strategic challenges will be in raising the profile and accessibility of the category in emerging markets, particularly the new growth frontiers within the BRICs, and in navigating tight margins in austerity-hit developed markets where purchasing trends will increasingly be value-for-money driven.

Rob Walker, senior fast-moving consumer goods analyst, Euromonitor International, can be contacted at rob.walker@research7.euromonitor.com.