Market Overview

The market size of baby related businesses in Japan (as a total of five key segments) in 2025 is estimated at 4.657 trillion yen, which represents 2.0% increase from the previous year. While declining birthrate*1 is impacting overall demand, market growth is underpinned by the expansion of babycare services (primarily child daycare). In detail, year-over-year growth was witnessed in two segments (babycare services and publications/toys) while other three segments diminished.

Babycare services segment (child daycare) sustained marginal growth. Despite a headwind from declining enrollment, the segment was buoyed by government birthrate initiatives and public subsidy programs. In the publication and toy categories, sales of parenting publications and infant/toddler toys remained steady, anchored by the enduring popularity of long-selling picture books and established titles. Demand for educational toys was particularly robust, driven by a strong parental focus on early cognitive development and products that facilitate parent-child bonding.
In contrast, the baby products segment—including food and clothing—experienced an overall downward trend. While price hikes temporarily boosted revenue for certain items, the broader segment was heavily impacted by a contracting customer base driven by the declining birthrate.

*1 Source: Vital Statistics, Ministry of Health, Labour and Welfare

Noteworthy Topics

Impact of Price Increases

Revenue growth in selected segments was fueled by retail price increases in response to rising input costs.
In the baby product category, the market for paper baby diapers has experienced volatility over the past five years. Although shipment volumes have dropped since 2020*2, shipment value recovered in 2024 and is projected to post modest growth in 2025.
Despite the ongoing impact of declining birthrates, the market for baby bottles and replacement nipples expanded in 2025. This growth was driven by price increases implemented by leading manufacturers, alongside higher unit prices for premium, function-rich products. Meanwhile, demand in the toys category has remained relatively stable, supported by heightened parental emphasis on early childhood cognitive development.  Retail prices across this segment have also trended upward in response to rising material costs.
Looking ahead, further price increases are anticipated in 2026 due to escalating materials, manufacturing, and logistics costs. As a result, certain segments are expected to continue demonstrating value growth.

*2 Source: Production Trends Statistics, Ministry of Economy, Trade and Industry

Future Outlook

Going forward, the outlook for the five key baby-related segments remains weak, as the declining birthrate*1 and contracting child population*1 continue to constrain the market. Modest growth is expected over the next few years, largely driven by the babycare service segment (child daycare), which benefits from public subsidies and government initiatives addressing the declining birthrate crisis. However, long-term prospects remain uncertain as declining daycare enrollment creates persistent headwinds for the industry.
The primary challenge for baby-related businesses in Japan lies in mitigating the risks of a shrinking customer base. To address this, companies are focusing on developing premium products to stimulate new domestic demand, and/or expanding their overseas operations—a strategy most likely to be led by large enterprises.

Research Outline