Baby Products

Why is there a Surge in Investments in Baby Care Industry of India

It's a huge opportunity for the companies dealing in Child Care
Why is there a Surge in Investments in Baby Care Industry of India
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Founder and Head- Brand Strategy, Mother Sparsh
4 min read
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Indian economy is growing at an impressive rate with over 7%. And the forecast is that the growth rate will remain above 6% over the next five years too. This is because of the fast-rising working age population and good labor productivity gains.

India’s robust economic growth and rising household incomes are expected to increase consumer spending. Spending capacity equipped with available information over the internet is changing the way Indians are buying baby products and coupled with Artificial Intelligence the buying process will be re-enforced by the companies to stay ahead of the competition.

The baby products market is highly competitive. Innovation, customization, affordable pricing etc are the product differentiators.  The number of baby care products in India has almost doubled between 2015 and 2016.

Projected Growth

The projected growth rate of baby product market is over 17% (CAGR) till 2020 which includes diapers, wipes, powders, lotions and other accessories. This growth rate is contributed by certain factors like

  1. Increasing disposable income.

  2. Birth Rate.

  3. Working mothers and nuclear families.

  4. Increased awareness of the benefits of the products.

  5. Online retailing.

  6. Internet penetration.

  7. AI.

The Indian middle class is largely living in urban areas and the figures are to touch 60% by 2030 which is a very good sign for the economy as exchange of money will be much faster in the economy. The increasing disposable income of young parents will not be just for their own wellbeing but majorly for the childcare. The potential of baby care market is also aligned to the birthrate of Indian where over 2 crore child births take place on a yearly basis thus creating a potential market.

Working mothers also present a good opportunity for this market to flourish as mothers are the ones who take primary interest in the wellbeing of their children and with financial power in their hands coupled with online platforms will make the whole sales process smoother and faster. An increase in the awareness of the utility of the products coupled with the fast paced lifestyle is another reason why mothers are opting for these products.

The internet accessibility has given a big boost to the market of baby products as the penetration of 4G services is getting better on a daily basis where urban internet penetration is over 65% and rural internet penetration is over 20% and is growing. Internet accessibility with AI scripts will change the whole process of customer acquisitions as the new consumer base is tapped. The companies can approach the offline market using creative approaches like meets, forums, help lines etc.

Challenges

Despite the rosy picture, Baby product market in India is still far behind to achieve its true potential as per capita income is low and only a limited percentage of urban population uses these products for their children. The utility of these baby products is yet to be realized by the huge middle class of India as awareness levels are still growing in many segments.

Cultural aspects are also an undermining factor, cloth based nappies, wipes are a common scenario and kids get other accessories from their older siblings, friends or relatives kids etc. Hence, this segment needs lots of promotional campaigns to create a new customer base.

With increased awareness in pollution, some baby products like wipes result in an annual waste of 1200 tones of plastic, which is not completely bio-degradable. This indicates that soon there will be requirements for nature friendly baby products in the market.

Conclusion

This is a niche segment and has huge potential to grow; brands need to engage with the parents to address their requirements.  There is immense scope for competition and the products to evolve as safe, natural and eco-friendly. The urban population is already exploring organic & eco-friendly products for their children, and in response there has been an influx of new brands. This industry is going through a big metamorphism where players are constantly involved in innovative development to widen the market, by using new technologies and advanced marketing approaches.   

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