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MP52249

MAPS BABY PRODUCTS DECEMBER 1999

Overview

Editor: Market Assessment
ISBN: 1-86111-357-9

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Table of Contents

Executive Summary

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TABLE OF CONTENTS

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EXECUTIVE SUMMARY

Demographic Trends

The baby products market is inextricably linked with the overall birth rate, which has been falling steadily since the beginning of the 1990s; there were 636,000 births in 1998, compared with nearly 700,000 in 1991. Although the fall in numbers of babies is clearly not a good trend for the industry, there are associated factors which are more promising.

For example, women are tending to defer childbirth until their late twenties or early thirties, which means they are more likely to be financially secure, and able to afford higher quality baby products, and may also may be more discerning in terms of quality and styling. The trend for smaller families is not necessarily a negative trend, at least for the baby equipment sector, as most parents buy major items of equipment only once and use them for all subsequent children; it does, however, have a more direct impact on the markets for consumables such as toiletries and disposable nappies. On the plus side, smaller families generally have a higher disposable income, with more to spend on each baby.

Market Developments

Market Assessment's research found that, of the one in ten respondents with a child aged three or under, nearly half were in the 25-34 age group, and a quarter aged between 35 and 44. In total, 27 percent of all those aged 25-34, and 15 percent of 35-44 year olds, had a child in this age group.

Some of the major baby products brands - notably Pampers, Huggies, Johnson & Johnson and Mothercare - recorded high levels of above-the-line advertising spend in 1998-99. However, below-the-line promotions are of particular importance in this market. Some of the most important methods used include retailer initiatives, with major supermarkets and other large retailers in the baby products market encouraging parents of small children to sign up to `clubs' which offer discounts and other benefits. Sampling and direct marketing to prospective and new parents, through companies such as Bounty, have been in operation in the UK for many years. The end of the 1990s saw the development of a number of strategic alliances between companies who are targeting the small and tightly defined consumer base for the baby products market in different ways.

The Baby Equipment Sector

The baby equipment sector was worth an estimated £357m in 1999, representing a sales growth of some 33 percent since 1994. The industry has worked hard to counter potentially damaging trends; for example, tackling the declining numbers of babies through product innovation aimed at increasing the spend per baby. The industry has also campaigned against the purchasing of potentially dangerous second hand baby equipment; this, plus the generally improving economy, has resulted in a decrease in the proportion of products which are bought second hand rather than new.

Sales of prams, pushchairs and baby carriers account for around 44 percent of the baby equipment sector. Trends have included a move away from larger, more bulky prams and pushchairs towards products which are lighter and more transportable, and an increase in the popularity of combination products with a variety of uses. As another way of adding value to the market, manufacturers have increasingly concentrated on developing ranges of accessories to co-ordinate with prams and pushchairs.

Car safety seats have been one of the most dynamic subsectors, sales increased by more than 60 percent between 1994 and 1999 to reach £68m. The increasing emphasis on car safety, and on child safety in general, in the 19980s and 1990s has underpinned this development; most recently the accent has been on improvements in car seat designs in terms of comfort and styling, and in terms of convenience.

The increase in awareness of home safety issues among parents has benefited the home safety equipment subsector, as has the fact that manufacturers have become more innovative. The most important products here are baby monitoring products, and there has been much new product development, focusing on eliminating the problem of picking up signals from neighbouring monitors, and on increasing the range of aspects which can be monitored, as well as being able to see and hear their babies from another room. Parents can now, if they wish, monitor their movement and breathing patterns, and the temperature in their rooms. The home safety equipment market was worth £60m in 1998, a 58 percent increase on the 1994 figures.

Sales of nursery furniture reached an estimated £73m in 1999. This is a sector which has suffered from the fall in numbers of births, since most items of equipment are `necessities' which are bought only once: but there has been a decrease in the purchasing of second hand equipment, due mainly to safety concerns. These concerns - particularly about the dangers of SIDS - have also helped sales of bedding, particularly mattresses, and it is now recommended that parents buy a new mattress for each baby. There has also been a certain amount of product innovation, particularly in terms of products for travelling with a baby, such as travel cots and travel highchairs.

Most of the major players in the nursery equipment sector are active in more than one subsector; this has become increasingly important in recent years as combination products such as travel systems, which incorporate both car seats and prams/ pushchairs, become more popular.

While more than half the respondents taking part in Market Assessment's survey agreed that the wide range of baby equipment now available makes life easier for parents, an even higher proportion - nearly seven in ten - find the sheer variety of equipment confusing, making it difficult to decide what to buy. Nearly four in ten say good, unbiased advice is difficult to find, and more than half say they have taken, or would take, advice from family and friends when buying equipment.

There are contradictory opinions on the question of second hand baby equipment. Although the vast majority (73 percent) think it is perfectly acceptable to use second hand equipment as long as it is safe, a third say that for them personally it is important that everything is bought new. And, although nearly seven in ten say there is nothing wrong with passing equipment from one child to another within a family, nearly one in four say they would not accept baby equipment which had been passed to them by friends or family. More than four in ten say they would not buy a second hand car seat.

The total market for baby equipment is forecast to stand at £432m by 2003; car safety and home safety products will be the most dynamic sectors, with growth of around 7 percent a year.

The Feeding and Sterilising Equipment Sector

The market for feeding and sterilising equipment is closely allied to the method of feeding chosen by mothers. Women in the UK are less likely than those in other European countries to breastfeed their babies; although around 75 percent of first time mothers breastfeed their baby initially, only 27 percent continue to do so after four months.

The feeding and sterilising equipment sector has grown steadily over the past few years, again mainly due to product innovation, and now stands at £49m. Sales of feeding bottles account for 39 percent of the market, and sterilising equipment for 15 percent.

There are a relatively small number of brands within the sector, with Avent taking the major share, followed by Boots and Mothercare, and two brands owned by Jackel International; Tommee Tippee and Maws.

The balance of opinion among those taking part in Market Assessment's survey favours breastfeeding as being `better for babies', with two thirds thinking this is the case. However more than four in ten acknowledge that bottle feeding can be just as good. On the question of making life easier for parents, the reverse is the case, with 57 percent saying bottle feeding is best in this respect, while slightly less than this (53 percent) saying that the cleansing and sterilising make bottle feeding hard work.

The slow but steady growth of the sector is likely to continue over the next few years, and sales are expected to stand at £59m by 2003.

The Disposable Nappies Sector

The market for disposable nappies began to take off during the 1980s, and growth continued throughout the 1990s, with disposable nappies almost completely taking over from terry nappies, which now account for only around 2 percent of the total nappy market. Thus, the market for disposables is nearing saturation, and the emphasis is now on adding value by providing increased comfort and mobility for babies, as well as nappies for different purposes.

The potential effects on the environment of the almost universal use of disposable nappies have been the cause of much concern in recent years, and there have been some efforts by niche manufacturers to develop more parent and child friendly non-disposable products. However, at present it seems unlikely that they will be adopted to any great extent; as Market Assessment's consumer research discovered, although 43 percent of parents said they were concerned about the environmental effects of disposables, exactly the same proportion said that they personally would not use non-disposable products.

Product innovation in the form of greater absorbency and leakage prevention has tended to mean fewer nappy changes, which, combined with declining numbers of births, has led to something of a fall in unit sales. However, despite keen price competition, the higher prices commanded by premium products have helped to sustain a modest level of market growth, with sales estimated to stand at around £470m in 1999.

The disposable nappy market is dominated by two global brands: Pampers from Procter & Gamble, and Kleenex Huggies from Kimberly-Clark; the latter entered the UK market in the mid 1990s, having the effect of squeezing out smaller brands, and decreasing the market share of own label products.

The total market for disposable nappies will grow slowly over the next few years, to stand at £509m by 2003.

The Baby Toiletries Sector

The value of the market for baby toiletries has held up well, despite the fall in birth numbers, partly due to the demand for convenience leading to a strong growth of the baby wipes sector, which accounted for 61 percent of baby toiletries sales in 1998; these have displaced cheaper nappy changing options such as cotton wool. Sales within the overall sector were worth an estimated £170m in 1999, compared with £160m in 1998.

Johnson & Johnson, which has a strong presence in both the baby wipes and other baby toiletries sectors, is the clear market leader, underlining the preference of mothers of small babies for branded rather than own label products. Both the major manufacturers of disposable nappies have their own brands of baby wipes, but do not produce other toiletries products.

The market for baby toiletries and wipes is expected to grow by around 8 percent a year for the next four years, reaching an estimated £224m by 2004.

Text © 1999 MAPS

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