.jpg) Stacks of baby formula at a warehouse in Suwon, Gyeonggi Province. Baby formula makers, among others, have been hit hard by Korea’s low birthrate. They have been trying to cope with it by making premium products but this effort may be falling short. / Korea Times |
By Kim Tong-hyung
Staff Reporter
The country's skidding birth rate has dairy producers and maternity clinics reeling, as they desperately seek new ideas to halt their revenue slide. Baby clothes and shoes, however, remain as potent business items, as each newborn becomes even more precious, and thus, more dressed up.
It was just last year when milk companies enjoyed flourishing sales of their powdered milk products with the help of superstition, benefiting from the record number of couples timing the birth of their babies during the ``golden pig year'' of 2007, which supposedly brings good fortune to newborns.
However, it now seems that the luck is wearing off as the companies now brace for the bottom falling out in powdered milk demand.
According to government figures, the country's fertility rate, or the average number of children women are having, was 1.26 in 2007, up from the 1.13 of the previous year. The powdered milk market expanded accordingly, valued at 427.3 billion won (about $337 million) in 2008, up 13 percent from the 377.1 billion won of 2007.
However, with the recent economic turmoil discouraging families from having more children, the country's fertility rate has now dropped to 1.19. Industry watchers believe that the country's powdered milk market will be scaled back to around 410 billion won.
No wonder milk companies have been marching to the drumbeat of the government's birth promotion campaign, while dangling new incentives to mothers. The most conventional marketing effort is discounting powdered milk prices for families with multiple children.
Ildong Foodies had been offering 15- to 20-percent discounts on their powdered milk products to families with more than three children, but is lowering the bar to two children through the first half of next year. Namyang Dairy Products has also been offering 10- to 20-percent discounts on their powdered milk products from the third child.
The companies are also becoming more attentive to the country's growing number of international marriages. Ildong, Namyang and other companies like Maeil Dairies and Pasteur are now including English, Chinese, Vietnamese and Cambodian information of their powdered milk products on their Web pages.
``Considering that we export more than 10 percent of our powdered milk products in Vietnam and other countries, providing information in different languages has become important in our marketing efforts,'' said a Namyang spokesman.
Clearly, the lucrative year of 2008 has been an exception as the country has been concerned over the falling birth rate for more than a decade, which now ranks among the world's lowest.
Powdered milk sales accounted for 35 percent of Namyang's revenue in 1999, but just 17 percent last year. Maeil sold more than 250,000 cans of its 400-gram powdered milk products in 2001, but only 140,000 units last year.
This has the companies diversifying its revenue models and selling new products such a fruit juice and yogurts, as seen by the moves from Maeil, Namyang and Ildong.
Maternity hospitals have been suffering longer, as they didn't even have a good 2008, as mothers and newborns were long out of bed by then.
According to numbers by the Health Insurance Review and Assessment Service, patients spent around 439.8 billion won at maternity clinics around the nation last year, a 0.15-percent drop from 2007, representing the first annual decline since 2004.
Patients spent a combined 19.16 million days at clinics last year, nearly a 30-percent drop year-on-year.
The declining number of newborns is leading to a declining number of clinics. The country had 1,907 maternity hospitals in 2005, but the number dropped to 1,818 in 2006, 1,737 in 2007 and 1,669 last year.
The clinics that remain in business seem to be surviving on side jobs rather than their traditional business of delivering babies.
The message boards at Imsanboo.com (www.imsanboo.com), an online community for pregnant women, are flowing with comments from frustrated would-be mothers forced to move from clinic to clinic. Many mid-sized maternity hospitals are found to be blatantly refusing to deliver babies, instead focusing on easier and more profitable services such as skin care and cosmetic surgeries.
``I have used a maternity clinic in my neighborhood, but they drove me out just after five months, only telling me then that they aren't delivering babies,'' read one of the posts.
The Health Insurance Service believes that only 30 percent of the country's maternity hospitals have capable personnel or equipment to deliver babies.
Fashion is an unexpected area that seems to be benefiting, or at least avoiding serious damage, from the lowering birth rate.
The country's department stores are reporting increasing sales of baby clothing, especially from high-end brands, where imported products account for a larger part of the growth.
Lotte Department Store, the country's biggest department store chain, said that the sales of infant attire rose 19 percent in 2008 from a year earlier, with the sales of imported products rising 33 percent. Shinsegae Department Store saw a 20-percent increase in the sales of baby clothes in 2008, while Hyundai Department Store said the sales of its imported products rose 60 percent annually last year.
The department stores are saying that the trend is continuing this year. ABC Mart, a shoe retailer, said its revenue from children's shoes rose nearly 60 percent during the first half of the year compared to last year's numbers.
``Mothers seem to be more aware about how their children are dressed. The lesser number of children also mean that they are getting presents from more people among family and friends,'' said a Lotte Department official.
thkim@koreatimes.co.kr
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