India's childcare market expected to grow on the back of macro drivers

Redseer expects the market to grow at 14% CAGR to reach $60bn size by 2027 from $31 bn in 2022

Despite India having one of the highest birth rates globally, spending on childcare products in India remains a fraction of that in the developed world. In 2022, the average expenditure per child in India was Rs 8,000, compared to Rs 46,000 in China and Rs 24.1 lakh in the US. In 2021, the birth rate per thousand in India was 16.4, compared to 7.5 in China and 11 in the US.

However, underpinned by macroeconomic drivers, the childcare product market is expected to grow at a healthy pace. The draft red herring prospectus filed by Softbank-backed Brainbees Solutions—the first pure-play childcare product company seeking a listing in India—provides a comprehensive overview of the market. (see link: https://www.sebi.gov.in/filings/public-issues/dec-2023/brainbees-solutions-limited-drhp_80275.html)

The market for childcare products is forecast to grow at an annualised rate of 14 per cent to $60 billion (Rs 4.8 trillion) by calendar year 2027 from about $31 billion (Rs 2.5 trillion) in 2022, according to the prospectus, citing a study by consultancy firm Redseer. Meanwhile, the average spend of Rs 8,000 per child in India is expected to double by 2027.

"Childcare product spending is currently nascent but rapidly growing in India. The Indian childcare products market ranks among the largest globally. However, on a per capita basis, the market is still highly underpenetrated compared to more mature markets. The growth in per capita childcare product spending in India is projected to be one of the fastest globally, driven by rising awareness of childcare, child health and wellness, increasing disposable incomes, shifting customer perceptions towards viewing childcare products as essentials," states the prospectus.

Redseer has identified several growth drivers for the childcare products market. These include rising adoption amid increasing disposable incomes, shorter replacement cycles, increased penetration across Tier-II cities and towns, and a growing preference for premium products. At a more macro level, rapid urban population growth, a growing share of working women, and the increasing adoption of the internet and e-commerce are also seen boosting the market.

The childcare product market comprises segments such as apparel, toys, consumables, and hard goods. Most of these sub-segments, particularly products like diapering, baby food, and bath and skin products, are considered perpetual markets given the non-discretionary nature of spending.

Over 40 per cent of India’s childcare products market spending comes from parents with children aged 0-4 years.

About 80 per cent of the childcare products market is unorganised. In the organised sector, the market includes horizontal and vertical players. Horizontal online platforms include Amazon, Flipkart, and Meesho. Vertical online platforms comprise Hopscotch, Myntra, and Ajio. Firstcry operates as a multi-channel retailing platform.