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Consumers Continue to Win with Disposable Baby Diapers



competition keeps price down, innovation up



By Karen Bitz McIntyre
Editor




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Despite continued escalating raw material prices and improved fit and performance, pricing levels have remained stable in the disposable baby diaper market in recent years as branded leaders have continued to compete heavily with their store brand equivalents. Add to this heavy promotions such as sales and coupon deals and disposable diapers continue to be a bargain for many consumers.

This situation has caused concern throughout the diaper supply chain, however, as diaper manufacturers and their suppliers have had to tighten their margins and find ways to make their businesses more efficient while raising the bar in terms of performance. To combat this, at least one diaper producer has already an­nounced its intent to raise prices. In October, Kimberly-Clark, the maker of Huggies diapers and Pull-Ups training pants,  said it would increase prices of its consumer goods 4-7% during the first quarter of 2008, blaming inflationary pressure and higher raw material and energy costs for the raise.

“The consumers have gotten a better and better deal for some time,” explained Pricie Hannah, vice president of industry consultancy John R. Starr, Inc., who said she understands K-C’s price increases. “There is good reason for the market as a whole to pass through what has been quite an accumulation of raw material prices. It’s impossible for the industry to hold back on this price increase forever. No one in the supply chain has much more to give.”    

In the past, heavy competition in the disposable diaper market, particularly between K-C and the other branded leader, Procter & Gamble, has led to a rejection of pricing increases. For its part, P&G has not yet an­nounced any counter to the K-C announcement.