While the global market growth of the consumer goods sector is forwarding with wobbly steps, the mother & baby-care sector is seeing a steadier growth in the last decade. According to Grand View Research, the global baby products market size is expected to reach USD 16.78 billion by the year 2025, with a healthy CAGR of 5.5% over the forecast period.
The mother & baby-care industry is extensive and covers aspects such as F&B, personal care products, nursery furniture and feeding products. Part of the optimistic outlook is brought by the population growth in the emerging economies in Asia Pacific, South America and Africa regions. Global consumers’preference for product value/premium product over cheap pricing is another push factor. Additionally, a new wave of young parents – millennials and Gen Zs – is embarking on their journey to parenthood. Their purchasing decision journey and shopping mentality both before and after the birth of their newborn are key to understanding and keeping up with the competition.
In China specifically, the sector has also witnessed significant growth and shows no signs of stopping. According to statistics from Beijing-based internet consultancy Analysis, revenue from the maternal and infant market in China reached 2.9 trillion RMB in 2019, and the figure is expected to reach 3 trillion RMB this year. The whole industry is expected to maintain a 20 to 30 percent annual growth rate in the next 10 years.
#1 Quality Over Discount
Parents have always wanted the best for their children – and this is especially true for millennial and Gen Z parents. For them, a“quality over quantity”approach is important, and high-tech gears, organic foods, and chemical-free baby products are worth the cost. In the coming decades, successful brands of the sector are the ones who can cater to these young parents who look for the best for their little ones. Quality will be the king.
Reasons? Millennials and Gen Zs are transferring their own consumption habits and values into the shopping charts for their babies. If they themselves are buying organic healthy food and high-tech gadgets, then the idea of denying the same quality to their children is almost immortal. On the other hand, today’s children are deemed as worth of more protection and care than before – they are seen as a smaller version of adults. The old “free range” sort of kid-raising method is no longer relevant. Additionally, the overall consumption upgrading and rising consumer confidence across the world (at least until last year) further enables parents to purchase the premiums.
In China specifically, besides the above points, the one-child policy coupled and the rise of middle class and accordingly more disposable family income, have prompted parents to become ever more meticulous about what they buy for their children. Although the one-child policy has been lifted since end of 2015, it did not cause a surge in the nation’s birth rate – in fact, China’s birth rate has dropped to the bottom low in 2019, since 1949. Baby product safety scandals (the 2008 Chinese Milk Scandal being the most notorious among all) happening frequently during the last decade also added to the selectiveness of the Chinese parents. An online survey in 2018 from Statista revealed that Chinese parents in the first tier cities such as Shanghai, spent as much as CNY 6,370 (~USD 900) per month on average on baby products. On the other hand, according to China’s official data, the average monthly salary then of a middle-class household was RMB 11,458 (USD 1,620). This means that Chinese families are willing to invest half of their total household income in baby products.
#2 Trust, Safety and Technology
Health and wellness is high up on the consumer agenda, and the baby market is no exception. With a rising alert of the consequences of environmental pollution and harmful artificial chemicals, parents these days are looking carefully into the ingredient chart for reassurance. Baby food and skincare products that feature natural and organic ingredients, pollutant-free material source, environmentally friendly production process and minimal added additives are gaining increased favor. This trend has been reinforced by the ongoing global pandemic, and behind it, are parents who have a heightened awareness for health and longing to increase their kids’ immune systems.
In addition, baby products that highlight “technology” element is also gaining an edge among parents. According to a survey conducted by Mintel, 48% of Chinese parents with children aged 0-3 say, they“have more trust or the same trust in baby-care products with high technological content, compared with products with a clear detailed Nutrition Facts label.
One of the best examples perhaps, in The A2 Milk, a dairy brand that is founded in 2000 in New Zealand and has just entered the China market in the past few years. The brand’s unique proposition is that it only contains a form of β-casein proteins called A2, instead of having A1, which is claimed by the company to be possibly harmful for kids’ brain development and immune system. In spite of the fierce competition in the enfant dairy sector, A2 Milk was able to achieve a 79% of sales growth in the past 2019 in the China market, thanks to the new scientific concept it brought up.
In the age of digitalization, consumers are constantly bombarded by large number of online advertisement. As a result, when it comes to baby products, parents might feel at sea and are eager for transparency of real information. New moms and dads these days choose to stay cautiously suspicious and giving less credit to big names – even established brands such as Heinz have gained unwanted attention from high sugar and salt content. It is crucial today for brands to gain trust from the young parents.
Products and brands need leverage these two dimensions, i.e.‘natural’ and ‘technology’, make them mutually supportive, guide consumers to find product facts from an ‘appropriate’ set of information, and make right choices.
#3 The New Mom Economy
Millennials and Gen Z moms are more independent and eager to strike a balance between parenting and working, and this mentality can put them under enormous pressure as a new mom. However, under the influence of the rising power of women and the modern concept of parenting, young moms prefer to “stand up for themselves” rather than have an obsession with sacrificing for families.
And no wonder putting the spotlight on “making things easy” for moms is a great strategy to start with for baby-care brands. According to Mintel Data, from the product perspective, nearly a half of new baby products launched in the recent three years in developed countries such as the United States and Japan have “convenient” claims, a relatively high proportion, compared to the 30% of China, which indicates great local market potentials. Pumping bras and hand-free baby carriers are some of the examples of new solutions that can alleviate burdens on moms.
Besides physical products, tech-savvy millennials and Gen Z moms are also looking into various digital platforms and online communities for a better motherhood in-between work and family life. Over the past six years, investors in the US have poured $500 million into companies playing in what can be thought of as“the new mom economy” — all the apps, gadgets, and services targeting first-time Millennial parents with a child under the age of one. Initially, gadget startups like 4moms, Hatchbaby, Owlet and Snoo were the first to gain investor interest. The space has since expanded to digital wellness, community apps and more. Totally Pregnant, for example, is a platform that provides new moms an informative gateway to a community of real moms and moms-to-be. Developed by Totally, a US tech start-up founded in 2016, the app allows users to watch 3D videos of their growing baby and tune into vlogs (video blog) by real moms.
In China, knowledge-sharing apps for new moms such as Baby Tree (宝宝树), Dear Baby (亲宝宝) are getting more and more users, reaching up to 80 million active users in 2019. The apps’social media function allows moms to form their own online community and share motherhood knowledge and product using experience, creating more influence upon buying decisions than EC platform or industrial experts.
Meantime, the pregnancy product category has also seen a high-speed growth in the past five years and is expected to maintain the upward tendency. Products in this category include skin care brands that help moms-to-be cope with various pregnancy specific issues, such as stretch marks, hyperpigmentation, hair, nail and vascular changes etc. Young moms have a higher awareness of wellbeing and are more willing/able to spend on themselves as well as on their babies. At the moment, the US is still the largest market for the sector and China is quickly picking up, with an estimated market size of CNY 120 billion, with an astonishing CAGR of almost 15%.
Aventura is a China focused venture builder and market partner. Aventura offers holistic solutions to launch, manage and grow businesses in China, drawing upon competences across marketing, sales, e-commerce, and logistics. Founded in 2011, the Group’s client base comprises a wide range of multinationals, international consumer brands, startups and investors. Aventura is headquartered in Shanghai, with additional representation in Hong Kong and Stockholm.