Baby products sales are plummeting in 2021, and it’s thanks to that one annoying visitor of 2020: the coronavirus pandemic.
Since the pandemic hit almost a year ago, there has been a worldwide decline in births, which experts attribute to the global contagion. Barclays predicts that births in China will fall 8% by the end of this year, while in the United States, the Brookings Institute estimates 300,000 – 500,000 fewer births by the end of the year compared to 2019.
But the current decline may not be the only contributor to a worldwide baby bust.
Brookings also predicts that permanent loss of wages as a result of the pandemic will cause many to put-off having children, even after the crisis has ended. As a result, industries that rely on the seemingly recession-proof cycle of birth are bracing for the worst.
Making Up for the Loss
An article in The Wall Street Journal reported that manufacturers of infant formula, baby food, and diapers are already strategizing on how to confront a possible years-long baby drought. Among them are leading baby products companies like Nestlé (which owns Gerber baby foods), Reckitt Benckiser (owner of Enfamil formula), Proctor & Gamble (which makes Pampers diapers), and Kimberly-Clark (which makes Huggies).
But their concerns did not begin in 2020.
In fact, birthrates have been dropping in the US and in China for years. In response, consumer giants have begun to pivot toward premium baby items to make up for lost profit. Proctor & Gamble, for instance, has begun making expensive diapers that use tape to imitate the fit of pants. Meanwhile, Huggies introduced its own premium diaper last year made of plant-based materials. These items cost more and are aimed at making up for a shrinking customer base.
For their part, Nestlé and Reckitt are focusing on health and wellness, offering pricey baby foods that accommodate a variety of dietary restrictions. Those include non-dairy formulas, as well as vitamin supplements for both babies and their parents.
And it’s not just the manufacturers who are trying to get parents to spend more. Walmart is shoring up its own baby aisle, bedecking the department with stylish strollers, trendy nursery décor as well as organic diapers and lotions. The retailer hopes that, if parents are having fewer children, they will be more willing to spend extra money on their smaller families.
Still, some baby specialists are turning their attention to new markets where the birthrate is not declining as rapidly. During Kimberly-Clark’s most recent earnings call, CEO Michael Hsu told analysts that they would begin eying markets like Indonesia where birth rates are higher.
But Hsu is the first to admit that it’s impossible to forecast the coming year.
“I don’t have a great view right now at this point of the long-term effects of COVID,” he conceded on the call. And a swift decline in childbirth might not prove a foregone conclusion after all. “There’s all different kinds of projections,” he said, “including a baby boom, because there’s less to do.”