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India, the great market for children's products

High birth rates and economic improvement make India a country of opportunities for toy and childcare companies

  • Key4Communications

India could be the world's largest market for children's products in the coming years. Obviously, this is not a short term trend, but given the country's birth rates and the good economic forecasts, opportunities are bound to arise.

For example the Indian toy market could double its turnover by 2015, up to €2.2 billion, ten times less than total 2011 revenue of the main market, the US, but near the €3.5 billion of the UK and France, and reaching the revenue of the Eastern Europe countries.

According to a report by Spielwarenmesse, India has more than 800 toy manufacturers and distributors, which employ about two and a half million people. 60% of the market is controlled by Indian and multinational companies with subsidiaries in the country. These companies are increasingly providing higher quality products.

In fact, parents are spending more money every year in higher priced toys, although 43.8% of the market continues focused on cheaper products, under 100 rupees (€1.5), according to a report by Euromonitor. The upper ranges are increasing their share, with 29.2% for toys between 100 and 200 rupees (€1.5-3) and approximately 10% for each of the upper ranges (€3 to €6, between €6 and €10, and more than €10).

In addition, multinationals are also increasing their presence and market share. Also according to Euromonitor, between 2008 and 2010, the share of Mattel has increased from 15.2% to 18.5%, while Hasbro's share reached 14.3% from the previous 10.7%. Both companies are the top toy manufacturers in the country.

Lego, with 1.1% also has an important presence, as well as Meccano, with 0.4%. The Indian company with the highest share is Hanung Toys & Textiles, with a 4.3% market share, as much of the industry remains dominated by small and regional businesses.

The distribution sector has even more challenges ahead: it consists mostly of independent retailers, who control 65% of turnover, but there is a clear tendency towards organization and retail groups.

The key: birth rates
The forecasts are also good for the childcare market, that could grow 12% annually through 2014, with increased participation of international companies and increasing brands demand, especially in rural areas.

Both sectors will boosted by the fact that India is the country with more births per year: 25 million, surpassing the 18 million of China. Moreover, 30% of the Indian population is under 14, compared to 15% in Spain, 19% in France, 20% in the US and 19% in China.

Currently, India is the second most populous country, with about 1.240 billion people. China remains the first, with 1.34 billion, but the UN expects India to become the most populous country at the end of the decade, largely due to Chines birth control policies.

The greatest challenge: the economy
The economic situation in India is not as good as it could be. According to Unicef, in 2009 the infant mortality rate of children under one year was of 50 per thousand (in Spain is 4). In addition, 18% of newborns showed low weight (in Spain, 6%), the literacy rate for men aged 15 to 24 years was of 88%, while for women it reached 74% (in Spain, 100%). And the income per capita was $1,170 per year (in Spain, is of $31,870).

The outlook is positive. India's GDP reached $4.06 trillion in 2010 and is now the fourth largest in the world, behind China ($10 trillion), Japan ($14 trillion) and the US ($15 trillion). In addition, GDP is growing at a rate of 9.1% (2009) and 8.8% (2010), in great part thanks to the fact that the country has spent years establishing itself as an exporter of technology and software services.

Furthermore, with all the difficulties and contradictions, India is a democracy since 1947, a fact that facilitates not only the relations with the West, but the expectations of future economic improvement of its citizens. Of course, the great problem is the existing inequalities, that should be faced and solved.

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