Sectoral Capsule - Indian Baby Care Industry-Baby Steps to Growth

India, with 1,258 million people, is the second most populous country in the world, just after
China. More than 127 million children under 4 years, along with its nearly 27 million annual
births and a fertility rate of 2.54 children per woman, make India an attractive market for the
baby care industry.

The domestic baby and child care market, which has been growing at CAGR
of 17 per cent since 2012, is set for a big boom with a host of global players
foraying with innovative products. Considering the huge potential that this market offers,
brands like Brevi from Italy, Combi from Japan, Bubba Blue from Australia, Tiny
Love from Israel, Grup Baby from Turkey, US Baby from China, Kiddy Gmbh from
Germany, Tolly Joy from Singapore and Farlin from Taiwan are some of the top
brands which will be making a debut in the local market
With India being home to around 50 million babies in the 0-2 years age group and
304.8 million children in the 0-12 years group, the country offers immense
opportunities to the segment players to tap this growing market.

The Indian baby care market has been witnessing speedy transformation with rising income
levels and changing consumer behaviour. At present, the Indian market is in the emerging
stage of development and is expected to become one of the worlds fastest-growing baby care
markets. Moreover, large population base in the age group of 0-4 years and increasing
willingness of parents to spend more on baby products will be the primary driving force in
near future. Rising middle class contribution, introduction of baby care products for the
bottom of the pyramid segment will drive the market towards steady growth. Most of the
companies operating in this segment are going for product innovation and development.
Manufacturing and trading of quality baby and child care products and services is becoming
increasingly important for a wide range of companies in India and globally. Indias children
and baby product industry is at US$11.12 billion (EUR. 8.52 billion). However, there is a
lack of organized trade platform for the baby and child care product industry in India.
So, lets look at some of the key pointers-

1. What is the approximately business volume generated by the childcare industry
in the country?

According to the statistics from the RNCOS March 2013 report, the Indian baby and
child care market has substantially grown during the past few years and caught the
attention of many international players. Estimated to be US$11.12 billion and
growing with a CAGR of 17%, Indian baby and children products market is expected
to reach US$ 21 billion (16 billion) by the end of 2015.

The continuing healthy birth rate, coupled with growing awareness, surging income
levels, aggressive marketing strategies, shifts in consumer behaviour and the
acceptance of premium products is set to maintain the growth momentum of the
countrys children, baby, and maternity products market.

2. Which are the strengths of the childcare market in the country?

The Indian baby care market is a largely untapped market currently dominated by
unorganised players and that has a high growth rate which is attributable to surging
income levels in India, growing brand awareness and shifts in consumer behaviour.

3. And its weaknesses?

The Indian baby and children care market is highly fragmented and unorganized with
more than 90% small and medium independent retailers serving the Indian consumers.
Besides, the traditional fairs, weekly street markets and the likes give big boost to
these local retailers who cater to multitude needs of customers at their doorsteps. This
convenience and affordability has given a domineering stance to the unorganized
retail.

4. So, How will the childcare market evolve in the country?

Currently baby and children care products are majorly sold through provision stores,
supermarkets, hypermarkets, general stores, chemists shops, cosmetics stores etc.
Moreover, companies are targeting middle class Indian consumers by expanding their
outlets in Tier II and Tier III cities. In addition, investors are also focusing on e-retail
platform to increase their presence and to occupy a major share of this fast growing
market, and with the Foreign Direct Investment entering with large retail presence,
will bring in an organized way of retail and showcase of global brands.

The major segments are baby food, baby diapers, baby hair care, baby skin care and
attendants. The research and development departments of major baby food and health
care products introduce a product depending on the taste and health issues, keeping in
mind the price range in which it is introduced. The ingredients and the nutritional
value of the popularly positioned products within the affordable range of middle
income group are assessed for a specific segment.

The major players in this market are aiming to penetrate deep into the urban market
and also stretch itself to the rural market with cheaper products without compromising
on the health factor.

Indian Baby Care Industry to Touch INR 1090.4 Billion by 2015: RNCOS Study

According to the research report conducted by RNCOS, the factors creating a huge
demand for baby and children care products are; increasing awareness about baby health and
nourishment along with increasing spending power of the parents. The report states that
the Indian baby and child care market has substantially grown during the past few years
and caught the attention of many international players. Estimated to be INR 647.6 Billion
in 2012, it is forecasted to register a CAGR of around 17 per cent from 2011-2015.
'The child and baby care market comprises of baby cosmetics, food, diaper, baby and
children apparel, footwear, toys and accessories/merchandise market. The cosmetics market
is valued at INR 7.9 Billion for 2013 that is growing at a CAGR of 12 per cent. The baby
food market is estimated to be around INR 5.4 Billion in 2013 and is anticipated to grow
at a CAGR of around 10 per cent during 2011-2015. The baby diapers market is valued at INR
1.9 Billion is expected to grow at a CAGR of 18 per cent. INR 586.1 Billion children and
baby apparel market projected to grow at a CAGR of 18 per cent during 2011-2015. On the
other hand the largely unorganized children and baby toys market is forecasted to grow at
a CAGR of 18 per cent during the same period. The children and baby accessories market
currently valued to be INR 27.0 Billion is likely to grow at a CAGR of 12 per cent during
2011-2015', mentioned the white paper.
CATEGORY VALUATION (2013) CAGR(2013-2015)
Baby cosmetics market INR 7.9 Billion 12 per cent
Baby food market INR 5.4 Billion 10 per cent
Baby diapers market INR 1.9 Billion 18 per cent
Children and baby apparel
market
INR 586.1 Billion 18 per cent
Children and baby toys market 18 per cent
Children and baby accessories
market
INR 27.0 Billion 12 per cent



The Indian baby care market has been witnessing speedy transformation with rising income
levels and changing consumer behaviour. At present, the Indian market is in the emerging stage
of development and is expected to become one of the worlds fastest-growing baby care
markets. Moreover, large population base in the age group of 0-4 years and increasing
willingness of parents to spend more on baby products will be the primary driving force in near
future. Rising middle class contribution, introduction of baby care products for the bottom of the
pyramid segment will drive the market towards steady growth. Most of the companies operating
in this segment are going for product innovation and development. The baby care market
including both products and services was estimated at INR 844 billion in 2011. The major
segments are baby food, baby diapers, baby hair care, baby skin care and attendants. The
research and development departments of major baby food and health care products introduce a
product depending on the taste and health issues, keeping in mind the price range in which it is
introduced. The ingredients and the nutritional value of the popularly positioned products within
the affordable range of middle income group are assessed for a specific segment. The major
players in this market are aiming to penetrate deep into the urban market and also stretch itself
to the rural market with cheaper products without compromising on the health factor