PERSPECTIVES: Global Child Population Growing, but there’s a Twist

Utku Tansel, Global Head of Toys and Games Research at Euromonitor International talks about world population growth and its impact on the toy industry.

November 13, 2012 | In 2011 the world’s population of children (0-14 year olds) was 241 million stronger than it was in 1980. On the surface of things this has to be a good sign for the toys and games industry. Not necessarily. Incredibly, 231 million of these extra children live in the Middle East and Africa, neither of which is considered a core toy market by the world’s big players. Compare this to developed markets, where the biggest demand for toys is, and birth rates are declining. So as their core consumer groups shrinks in cornerstones of the industry, should toy manufacturers be concerned? Not necessarily. A combination of growing spend per child in developed markets, and rising disposable incomes in emerging markets, means that there is power in pricing.

Global Population by Age Group, 1980-2020

Source: Euromonitor International

The numbers

  • The child population grew by 1% per year between 1980 and 1990 and 0.6% per year between 1990 and 2000.
  • Globally, the birth rate was 19.5 per 1,000 people in 2011 compared to 21.8 in 2000, while the fertility rate (the average number of children per woman) was 3.0 in 2011 compared to 3.4 in 2000.
  • As of 2011, 0-14-year-olds made up around 26% of the total global population compared to 35% in 1980.
  • At a global level the 0-14 year old population continues to increase such that there will be 52 million more children around by 2020. Again however, this increment is coming almost exclusively from the Middle East and Africa, traditionally smaller toy markets.

The reasons

This trend reflects cultural and social changes towards smaller family sizes in both developed and developing markets. Regionally, Eastern Europe has seen the largest decline in its child population, at an annual average rate of 2% between 2000 and 2010. This was partly due to large-scale migration to Western Europe as well as the transition period from Communism in the 1990s and 2000s when fertility rates and life expectancy fell due to economic hardship. Even in China, associated with growth across so many metrics, the child population fell by an average of 3% annually over the decade. This was largely due to the effectiveness of the one-child policy introduced in the 1970s, which has aimed to limit overall population growth. Of course despite this, China still has the second-largest child population in the world, at 218 million in 2010, after India at 365 million.

The impact

Toy manufacturers ultimately worry that the declining numbers of children in core markets will constrain their growth prospects. Yet, where fewer toys are bought, their value tends to be higher. One consequence of the overall downturn in birth rates in so many countries has been smaller household sizes and higher consumer expenditure per child, which in turn has led to more discretionary spending on non-essential products, especially toys and games. Since disposable income is a more important indicator for toys and games sales than demographics, the industry can still find growth through innovation, up-trading and pricing. And if that is not enough to allay concerns, it should be noted that in those emerging markets where demographic indicators are in relatively good shape, so too is the underlying trajectory of disposable incomes.