Falling birthrate forces companies scale back baby product business

Local companies are reducing the production of baby products, including powdered milk, in response to the country's declining birthrate. gettyimagesbank

Companies that traditionally focused on manufacturing baby products, are closing the businesses due to the diminishing demand resulting from the country's low birthrate, according to industry officials, Sunday.

Amidst the declining demand in the baby product industry, companies are either shutting down their production lines for these products or shifting their focus toward the elderly. The country's aging population has led to an increasing demand for healthcare and functional foods catering to this demographic.

Paldo last month stopped making Pororo Spagetti, a cup noodle for children with popular animated character Pororo as its model which the food company has been making since 2014, and instead decided to focus on other cup noodle products. A month before that, Pulmuone, another food company, closed its entire pipelines for functional foods for babies, a business it has been running since 2010.

In 2022, LG Houshold and Healthcare, better known as LG H&H, put the brakes on manufacturing powdered milk and baby food under Babience, its label launched in 2012. The company singled out the country's continually falling birthrate as the biggest reason behind the downsizing, as it decided to focus more on skincare products and fabric softners.

Another industry facing one of the most visible signs of impact is dairy product makers.

Namyang Dairy Products scaled back its powdered milk production by 60 percent compared to 2012, responding to declining market demand. Similarly, industry observers note that Maeil Dairies is also moving in a similar direction.

Namyang Dairy Products' TakeFit is one of the company's leading products now, a health care powder for adults that helps supplement protein, prevent muscle loss and increase bone density. Screen capture from Namyang's website

"The plummeting demand for powdered milk, snacks and other supplementary food products for babies have put dairy product companies in the country in a difficult position," a local industry source said. "We figured that to sustain our businesses, we must diversify our products further to shift away from the shrinking market."

To counter the latest developments, the companies began launching health care foods that target senior consumers including those in hospital beds and sanatoriums. Maeil Dairies last month signed a deal with MDwell, a local food maker that supplies products to medical institutions, to take charge of its operations. Namyang also started targeting senior consumers by launching protein-boosting drinks last year.

Ildong Foodis and Pulmuone also entered the senior care industry by introducing protein-balanced powders and other related products. Their businesses for the aging consumer group are expected to broaden.

"We have been eyeing the aging society trend for an extended period," said an official at Pulmuone. "This led us to introduce a specialized label in 2015 dedicated to senior-customized products, aiding elderly consumers with their dietary plans and nutritional enhancement."

While an increasing number of households are not having babies, another group of consumers, called "gold kids" and their parents, are leading a new market trend. Gold kids is a term used to describe children whose affluent parents concentrate significant expenditures on them. Various companies, including luxury brands, are actively targeting this demographic.

Harim Foods last November launched Foody Buddy, a label for a dietary lineup for children. An official at the company said that the low-birth trend has opened the doors to a new market for gold kids. Fashion brands have knocked on the doors as well. New Balance's new items include sets of clothing with same designs for parents and children, while Moncler Enfant has seen its luxury winter jackets for children sell out in Korea.