Carlos Richer, Richer Investment02.09.16
Last year you probably read a few reports about the future growth of U.S. birth rates, one of them appeared in the Huffington Post. These reports claimed, with some clever logic, that U.S. women were delaying pregnancy for several years now, and for this reason they could not wait any longer. According to the report, we should be expecting an increase in birth rates in the coming years, at least until 2020. INDA has taken a similar position sharing their expectations about the potential growth for the baby diaper market. So, what has changed?
First, let me share a personal story. My wife and I have a married daughter, the only one at the time who could provide us with our first grandkid. Last Christmas at the dinner table she told us that they were planning to be new parents the following year. So far, everything looked great. Although, a week ago, she told me that she has been listening to the many news clips about the Zika virus and its potential link to birth defects. Therefore, she and her husband have decided not to take any risks and plan to delay pregnancy. I must say that they do not live in Brazil or in Latin America; they are both U.S. residents living in Houston.
At the start of this pandemic, early last month, my first impression was that this whole situation was politically motivated, more due to an economic agenda, instead of a real health problem, nothing for us to be concerned about in the NAFTA region. After all, the Zika virus has been in Brazil for many years.
Brazil, as you know, is part of the BRICS (Brazil, Russia, India, China and South Africa) community. If we can accept the idea that maybe we are living in the middle of a world currency war, it made sense to me to think that the U.S. could have an influence on the tourism traveling to Brazil, and at the same time proving a point that it is better to look to your friends in the North, instead of trying to find them in the East. In the middle of the Carnival season, and with the Summer Olympics coming in Rio, telling people not to go Brazil—and we are not talking only about the pregnant ladies, but anyone who could get back home infected by the Zika virus—it is a very strong argument. There are TV spots in countries like San Salvador and Guatemala that have started suggesting to women not to get pregnant. Many TV shows, including Good Morning America in the U.S. have made similar arguments.
The problem today is that the Zika virus has been growing exponentially; it is no longer a local problem in Brazil, but a pandemic of global proportions. To make things worse, we will not see the real effect in a potential decrease of diaper sales until we start reaching the nine-month delay needed for gestation. If we wait, it may be too late. It is not a bad idea to track mosquito repellent sales; they may prove to be a good correlation with reduced diaper sales.
The Zika virus should be the number one priority for the baby diaper industry. If it keeps growing without control, the negative effect in the diaper industry could be devastating. So far we still see the large multinational diaper companies, like P&G and KCC with their stock prices going up. It will not take long for people to connect the dots. More Zika means less babies, and less babies means less diaper consumption.
For this reason I believe there should be some efforts to motivate laboratories to find a solution to this problem. Large independent associations like INDA and EDANA may help funnel economic resources from the large diaper manufacturers in order to provide the funds for research. Maybe even a large monetary prize could be awarded for the first one to find a practical solution to the Zika virus.
First, let me share a personal story. My wife and I have a married daughter, the only one at the time who could provide us with our first grandkid. Last Christmas at the dinner table she told us that they were planning to be new parents the following year. So far, everything looked great. Although, a week ago, she told me that she has been listening to the many news clips about the Zika virus and its potential link to birth defects. Therefore, she and her husband have decided not to take any risks and plan to delay pregnancy. I must say that they do not live in Brazil or in Latin America; they are both U.S. residents living in Houston.
At the start of this pandemic, early last month, my first impression was that this whole situation was politically motivated, more due to an economic agenda, instead of a real health problem, nothing for us to be concerned about in the NAFTA region. After all, the Zika virus has been in Brazil for many years.
Brazil, as you know, is part of the BRICS (Brazil, Russia, India, China and South Africa) community. If we can accept the idea that maybe we are living in the middle of a world currency war, it made sense to me to think that the U.S. could have an influence on the tourism traveling to Brazil, and at the same time proving a point that it is better to look to your friends in the North, instead of trying to find them in the East. In the middle of the Carnival season, and with the Summer Olympics coming in Rio, telling people not to go Brazil—and we are not talking only about the pregnant ladies, but anyone who could get back home infected by the Zika virus—it is a very strong argument. There are TV spots in countries like San Salvador and Guatemala that have started suggesting to women not to get pregnant. Many TV shows, including Good Morning America in the U.S. have made similar arguments.
The problem today is that the Zika virus has been growing exponentially; it is no longer a local problem in Brazil, but a pandemic of global proportions. To make things worse, we will not see the real effect in a potential decrease of diaper sales until we start reaching the nine-month delay needed for gestation. If we wait, it may be too late. It is not a bad idea to track mosquito repellent sales; they may prove to be a good correlation with reduced diaper sales.
The Zika virus should be the number one priority for the baby diaper industry. If it keeps growing without control, the negative effect in the diaper industry could be devastating. So far we still see the large multinational diaper companies, like P&G and KCC with their stock prices going up. It will not take long for people to connect the dots. More Zika means less babies, and less babies means less diaper consumption.
For this reason I believe there should be some efforts to motivate laboratories to find a solution to this problem. Large independent associations like INDA and EDANA may help funnel economic resources from the large diaper manufacturers in order to provide the funds for research. Maybe even a large monetary prize could be awarded for the first one to find a practical solution to the Zika virus.
