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Global Baby Care: Mighty but Small

By: Alexander Kirillov
Posted: August 5, 2008, from the August 2008 issue of GCI Magazine.

With global sales of $5 billion in 2007, baby care (which, defined by Euromonitor International, includes cosmetics and toiletries products for children 11 and under) remains one of the smallest categories in cosmetics and toiletries. However, with sales growing by 9% a year on average since 2002, the sector holds strong potential for further development—especially in emerging markets where increasing personal wealth and high birth rates keep the growth at double-digit levels.

Eastern Europe and Latin America Drive Growth

Eastern Europe and Latin America lead the way in growth in the global baby care product market. The regions contributed 40% of the market’s absolute growth during the past five years. On the contrary, sales of baby care in developed markets—including North America, Western Europe, Australasia and Japan—were disappointingly slow, reflecting falling birth rates in these countries.

In Eastern Europe, sales grew 13% in 2007, driven by strong economic growth in most of the region, particularly in the markets of Russia, Ukraine and Poland. Improved economic conditions combined with greater political stability made consumers more optimistic about the future and led to a rise of birth rates, notably in Russia—where the population had been shrinking since the beginning of the 1990s. Strong economic growth has also driven development of the baby care market in Latin America, where such economies as Argentina, Brazil and Venezuela were fuelled by strong increases in global commodity prices. As a result, the market grew by 9% in 2007. Dynamic birth rates remain high in the region, fueling demand for baby care products in the future.

Japan: A Drag on Asia-Pacific Growth

The Asia-Pacific region lagged behind other more dynamic global markets with a 7.4% compound annual growth rate (CAGR) throughout the past five years—though 2007 was a bright spot with above average growth. Japan contributed to the slower growth, where sales of baby care products were disappointing with only 1.1% CAGR from 2002–2007. Japan is, by far, the largest market in the region.