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Big Potential in Tiny Consumers

By: Carrie Lennard, Euromonitor International
Posted: August 3, 2010, from the August 2010 issue of GCI Magazine.
  • North America and Western Europe accounted for a 41% share of the $7 billion category in 2009.
  • Growth has been strongest in Latin America, and the region is predicted to add $414 million in absolute growth to the category 2009–2014.
  • Despite the economic downturn in 2009, the increase in the number of middle-income consumers resulted in strong sales of value-added products, with the share of private label remaining just under 4% globally.
  • The star performers globally were baby hair care and baby toiletries, boosted by female consumers increasingly opting to buy baby care products for their own use.
  • Baby sun care was the only category to experience consistent growth in 2009, achieving a 4% increase in North America and proving to be one of the more resilient categories to the recession in mature regions.

Baby care proved to be one of the most resilient categories during the onslaught of the recession, and outperformed the beauty industry as a whole (4%) with 7% value growth in 2009, according to market research firm Euromonitor International. Despite this, the category remains rather a niche globally, with sales heavily focused on the wealthier developed regions of North America and Western Europe, which together accounted for a 41% share of the $7 billion category in 2009. In turn, baby care accounted for just 2% of total value sales in 2009, meaning that there is still much work to be done before it can be considered a major driving force in the beauty industry.

Soaring Growth in Africa; Middle East

Although it is clear that the high disposable income regions of North America and Western Europe dominate baby care sales globally, they are no longer the primary growth-drivers. While value sales in emerging regions are still comparatively very low, many managed to maintain or even better their 2008 value growth rates. According to Euromonitor statistics, growth has been strongest in Latin America (20% in 2009) and Eastern Europe (9%), albeit from a far lower base than in mature regions like North America and Western Europe.

Africa and the Middle East achieved value growth of 13% in 2009, up from 12% the previous year. Despite this, the region cannot be considered a major focal point for growth in baby care because with sales of just $4 billion in 2009, it accounted for just a 7% share of global baby care sales. Furthermore, some of this growth was due to a high inflation rate that kept value sales high while volume growth declined or remained stagnant.

Latin America is the Region to Watch

Latin America is set to be a key contributor to global baby care growth and is predicted to add $414 million in absolute growth to the category 2009–2014, more than any other region. The region already accounted for a 24% share of total baby care value sales in 2009, and posted a dynamic growth rate of 20% in value terms, higher than the previous year (17%). The region’s comparatively high birth rate was a major contributor to the boom in baby care products; its birth rate of 19 per 1,000 inhabitants in 2009 was far higher than that of Western Europe, for example, with a birth rate of just 12 per 1,000 inhabitants. Furthermore, rising disposable incomes in the region meant that parents were able to spend more money on their children.