01-04-2021 · Insight

The ‘caring economy’: Resilient growth in uncertain times

Health and wellbeing concerns are becoming increasingly prominent in consumer spending decision making. If anything, this trend has been accentuated by the Covid-19 outbreak, with many people experiencing the detrimental impact on their health resulting from measures taken to fight the pandemic. In this context, prospects for the ‘caring economy’, one of the key focus areas for our Global Consumer Trends strategy in 2021, are therefore perhaps the brightest they’ve ever been.


  • Jack Neele - Portfolio Manager

    Jack Neele

    Portfolio Manager

  • Richard Speetjens - Portfolio Manager

    Richard Speetjens

    Portfolio Manager

The Covid-19 pandemic has in many ways emphasized this focus on the caring economy, with the renewed attention to health and hygiene.

The concept of the ‘caring economy’ is closely related to consumers’ growing focus on health and wellbeing, and refers to an economy that cares for both people and the planet. It encompasses various sectors benefiting from steadily unfolding consumer trends, like the growing importance of healthy lifestyles, hygiene and personal care, the rising demand for childcare, elderly care and pet care products and services, and the key role of sustainability considerations now play in spending decisions of consumers around the world.

The Covid-19 pandemic has in many ways emphasized this focus on the caring economy, with the renewed attention to health and hygiene, and to sustainability issues, being examples. In some cases, the outbreak has served as an accelerator of existing trends. Moreover, new habits established during the pandemic – such as those related to cleaning and personal hygiene, for example – are expected to persist even once the pandemic recedes and social distancing measures are relaxed.

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A broad playing field for growth investors

Within our caring economy concept, personal care products are arguably the most established segment. This market has been growing steadily over the past decades, on the back of consumers’ rising disposable incomes and increased awareness of health-related issues among the global population. Despite Covid-19-related headwinds, the sector proved relatively resilient in 2020. It is expected to recover rapidly and experience substantial growth over the coming years.

Figure 1: The global personal care and beauty market experienced steady growth – even during recessions

Figure 1: The global personal care and beauty market experienced steady growth – even during recessions

Source: Euromonitor, Robeco.

Pet care is also an important segment of the caring economy. It offers moderate but stable growth prospects, helped by a constant rise in pet ownership and increase in spending per pet. The main drivers are the rise in pet ownership worldwide and a consistent increase in spending per pet, resulting from – for example – an increased spending on fresher and healthier food or the growing prevalence of zoonotic diseases, which is driving up animal healthcare expenses.

In addition to moderate growth prospects, the pet care market also features a relatively resilient profile. In the US, for example, consumer spending on pet care grew during the 2008-2009 financial crisis, as pet owners first cut back on other non-essential items before trading down on pet food or cutting back on pet supplies. Consumer behavior appears to have followed a similar pattern in 2020, according to various surveys.1

Finally, childcare is another increasingly attractive segment of the caring economy. This industry has grown steadily over the last decades, supported by the rising share of women in the workforce and a growing focus on early-childhood education and quality childcare. For instance, the labor force participation rate of women aged over 15 rose from 49.8% to 52.9% between 1999 and 2019 in Organization for Economic Cooperation and Development (OECD) countries.2

The childcare sector also has other attractive features. First, it is virtually immune to digital disruption, as it is difficult to envision childcare activities being performed online. Second, parents are unlikely to change childcare facilities often, driving the customer stickiness of these businesses. Finally, it is also a relatively stable business, because demand is driven predominantly by demographics – and not economic cycles.

Resilient businesses for the post-Covid world

The Covid-19 pandemic has changed many consumer habits – those automatic routines that people follow while not thinking much about the tasks they perform. We think this is particularly true of behavior related to consumer health and wellbeing, and more specifically the caring economy. For example, since the onset of the pandemic, consumers have been washing their hands much more frequently.

Soaring demand for hygiene products, such as soap, sanitizers and cleaning wipes, explains why the personal care market proved relatively resilient last year, despite Covid-19-related headwinds. Because the heightened hygiene habits developed over the past year won’t change overnight, we expect these product categories to hold up well in 2021 and beyond, even as public health risks fade and economies reopen.

Meanwhile, pet care enjoyed even better dynamics last year, as lockdowns triggered a surge in pet ownership in many countries. In the US, for instance, the world’s largest pet care market, a survey carried out the American pet products association (APPA) found that 10% of respondents got a new pet at some point during the pandemic. The survey also found that, despite their financial difficulties, households had, so far, not significantly changed their pet product purchasing behavior.3

Similar positive adoption trends have been observed in key other countries, such as the UK and Japan, for example.4 Given the broad-based increase in pet ownership during the pandemic, expectations are that consumer spending on pets will continue to increase. For one, the combination of increased pet ownership and enhanced awareness regarding hygiene and cleaning could trigger new business opportunities.

In the meantime, the childcare market is expected to recover this year, after a difficult 2020 due to the Covid-19-triggered lockdowns and widespread remote working. The market’s long-term fundamental drivers – that is, the growing participation of women into the labor and the professionalization of early-childhood education – remain intact, while the industry still offers attractive investment opportunities.

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1 See: ‘APPA COVID-19 Pulse Study’ reports.
2 Source: World Bank data.
3 See: ‘APPA COVID-19 Pulse Study’ reports.
4 See for example: Ipsos Mori, 5 January 2021, “Ipsos Update - January 2021”, monthly research round-up.