pregnant woman

Demand for Baby Products Is Down

Falling Birth Rates Mean Lower Demand for Diapers and Formula

Recent data shows that the COVID-19 pandemic is causing people to have fewer babies. Analysts predict that this year the US birth rate will fall by 300,000 to 500,000—a much higher decline than the 44,172 drop seen last year. In China, the birth rate is expected to be 8% lower this year, double the decline seen last year. In 2016 China ended its one-child policy after 40 years, but after an initial spike, birthrates in the country have been falling over the past four years.

Fewer new babies means lower demand for diapers, formula, and other baby products. This is impacting companies like Reckitt Benckiser (RBLY), which owns formula brand Enfamil, as well as Nestlé (NSRGY), which makes formula and owns baby food company Gerber. Procter & Gamble, which owns the diaper brand Pampers, Kimberly-Clark (KMB), which owns Huggies, and other diaper makers are looking toward what could be a period of low demand for their products.

Companies Respond

Birth rates were already falling before the pandemic, and companies supplying baby products were finding ways to adapt. Now this trend is being accelerated. In countries like China and the US, many families are having fewer children but spending more money per child.

In response to this pattern, companies are selling more upscale formula for babies with specific nutritional needs. Similarly, Pampers and other companies are making specialized, more expensive diapers. Some are made out of sustainable materials, while others offer specific styles and fits. Companies are also expanding their offerings and making supplements for babies as well as their new mothers. Additionally, as the population ages, some companies are pivoting and creating nutritional supplements for elderly people.

Looking Ahead

Baby-centric brands have dealt with falling birthrates and subsequent drops in demand for their products before. Between 2007 and 2009 families had fewer children because the labor market was suffering. This seems to be the case in 2020 as well.

Looking ahead, some analysts predict the birthrate could stay low in the US for several years, even if the labor market strengthens.

A low birth rate impacts sales of baby products first, but then as a smaller generation of children grows up, sales of toys, educational products, and eventually products for young adults are impacted. A lower birth rate this year could have long-lasting effects on the economy.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT SoFi SoFi helps people achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing, and protecting give our more than one million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. For more information, visit Want an easy and convenient way to manage your financial life? Get the SoFi app. For iOS and Android.

TLS 1.2 Encrypted
Equal Housing Lender