What Baby Products Companies Will Teach Us About the Big Coming Baby Bust

In June, I wrote that the Brookings Institution is predicting that one-half million fewer babies will be born due to the Coronavirus. The 104-year-old think-tank puts it this way in its report, “Half a Million Fewer Children? The Coming Covid Baby Bust: “The COVID-19 crisis is amounting to much more than a temporary stay-at-home order. It is leading to tremendous economic loss, uncertainty, and insecurity. That is why birth rates will tumble.”

According to Brookings, economics is the primary driver of birth rates. “a one percentage-point increase in the unemployment rate is associated with a 1.4 percent decrease in birth rates.” As I wrote at the time, the toy industry need to start planning now to handle the coming drop in the number of children which will begin to hit us in two to three years.

One way we can do so is by paying attention to how Baby products producers will handle the impact. They will begin feeling the impact over the next few months and into next year.  Whether it’s diapers, formula, or baby clothing, companies like Pampers, Enfamil, and Carters will be the canary in the coal mine for the toy industry. We need to pay attention to how they handle the challenge.

For example, some baby products suppliers are creating lines of higher-priced products. The logic: If there aren’t as many babies, let’s generate more dollars per sale. That’s why Nestlé SA, Danone SA, and Reckitt are creating “pricier baby food.”

Enfamil, the maker of baby formula, is taking a different approach. It’s expanding its business into Nutritionals for the elderly.

The toy industry can emulate Enfamil by creating more toys for adults. It can match Nestlé’s efforts by creating higher-priced toys that appeal to older, financially stable first-time parents in their late 30s and early 40s.

Its a solvable challenge if we start watching and learning now. Let’s do it.

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