Bringing Up Baby

August 17, 2005

competition in the disposable baby diaper market has led manufacturers to look toward innovation and global outreach to increase sales

In the mature baby diaper market, manufacturers have had to do two things to expand their sales and marketshare. For one, they have had to wow parents with extras such as high absorbencies, skin care benefits, superior fits and performance improvements; for another they have had to look globally to the developing markets where not every parent has historically had the extra funds necessary to equip their infants with disposable diapers.

In the U.S., diaper manufacturers recently took part in a package size revamp led by disposable diaper giant Procter & Gamble, Cincinnati, OH. The new sizes are smaller and the current jumbo packs now contain what studies have shown to be a week’s worth of diapers. In addition to making diaper shopping easier for consumers, the new sizes have also raised the price of diapers for the first time since 1998. For instance, P&G lowered the counts of its diaper products 13% but only lowered the price 7%, increasing the price per diaper 6%. Other diaper manufactures, including Kimberly-Clark, Dallas, TX, and Drypers, Houston, TX, have followed suit, bringing counts down and increasing prices.

“The new prices consider the increased costs of raw materials as well as the cost of the innovation we have added to our products,” said P& G spokeswoman Tami Jones. Among the innovations from P&G are super stretch sides panels on its “Pampers Premium Custom Fit” premium diapers, which adjust to fit the size of the baby—and the addition of a zinc oxide ointment to its “Rash Care” specialty product. The company has also changed the backsheet on its “Pampers Baby Dry” standard diapers from cloth to plastic, according to Ms. Jones.

“Pampers has not raised diaper prices since 1998,” Ms. Jones said. “Pampers has made significant improvements to its diapers over the past two years to better meet the needs of our consumers. We took this opportunity to restructure our diaper counts to more closely represent a week’s supply and then took the pricing we needed to offset costs of innovation and raw materials. We do not anticipate a noticeable impact to U.S. sales and earnings as a result of the package count change.”

As is the case with most products in the consumer products industry, innovation in the disposable diaper market has been spurred by consumer demand. As people’s lives become busier and their disposable incomes rise, they want the most effective, most absorbent, most comfortable diapers for their babies.

One company seeing this trend is Hartmann AG, Heidenheim, Germany. “We see three general trends in Germany and globally,” said company spokesperson Margarete Kraemer. “These are the trends toward more convenience, the desire for wellness and an increased health consciousness, driven by lifestyles, the corresponding lack of time, increased levels of stress and many medical conditions.”

All of Hartmann’s diapers, which include the brands “Fixies Ultra Dry” standard diaper and “Fixies Extra Class” premium diaper are air-active with breathable textile backsheets. “This responds to the consumers’ need for more health promoting products and it contributes to the baby’s comfort due to better dryness, less skin irritations and rashes,” Ms. Kraemer added.

To help meet the needs of parents and their babies, K-C recently added a dry touch layer to its “Huggies Supreme” disposable diaper. The layer pulls moisture away from skin to keep it dry. The company has also added the Ultra SkinGuard liner, which is a gentle lotion designed to protect skin from wetness, to its "Huggies Ultratrim" disposable diapers. “Consumers’ expectations have always been extremely high,” said Mark Scott, marketing director for North America infant care for K-C. “They want diapers to prevent leaks and keep their baby’s skin healthy. They recognize that to do that, they need a product that fits their baby well and is comfortable. We expect our consumers to continue to have these very high standards and that’s why we continue to look for ways to improve our products.”

Looking Globally
Sales growth in the estimated $4 billion North American disposable baby diaper market has been threatened by a decreasing birth rate and a lowered number of diapers used each day for the average child. This growth lag has given most major manufacturers an incentive to look globally to markets that are now finding relief from economic crises. For instance, P&G recently announced plans to expand its reach into Mexico and Drypers has begun offering a disposable baby diaper in Brazil. Furthermore, companies based outside the U.S. are developing innovative products. One such company is Absormex S.A., Monterrey, Mexico, which recently developed a biodegradable disposable baby diaper.

Absormex’s biodegradable diapers contain a totally degradable plastic additive, based on free metal radicals, that accelerates the biodegradability of the diaper, making it friendly to the environment. This additive is added to the plastic pellets before the extrusion process. Absormex executives said the drive to create a biodegradable diaper was born from the desire among consumers to preserve the environment. The biodegradable diaper is likely to keep eco-conscious consumers from reverting to cloth diapers.

“Responsible companies have to develop better products for the environment. We believe it is a continuous improvement process that will not stop until we find an acceptable solution for the environment,” said Carlos Richer, Absormex general manager.” We can prove degradability in the landfill for the polyethylene film and polypropylene nonwovens today, we want to be able to claim other improvements in the future until we can reach 100% of the diaper.”

Another trend being recognized by most diaper manufacturers is the push toward a more absorbent core. Higher absorbencies cater to the need for convenience among time-strapped parents by allowing the same diaper to be used during several urination cycles while at the same time increasing the overall comfort of the child. One such possibility for increased aborbency is the air laid core, which has become a subject of great speculation as nonwovens producers continue to vastly expand air laid capacities.

“Our industry works on many different absorbent core concepts competitive to today’s standards,” Hartmann’s Ms. Kraemer said. “The air laid core is one of those possibilities. New developments aim at providing users with the same or an even improved level of satisfaction and reducing the total cost of the diaper. There are several ways to achieve this target.”

What’s Ahead
The push toward innovation—whether in terms of absorbency, thinness or skin care benefits—is certain to continue as long as competition in the disposable baby diaper market remains fierce. “Diapers are thinner and probably will continue with this trend,” said Absormex’s Mr. Richer. “There will be some work in the direction of skin care, however I do not believe that claims for antibacterial diapers will be successful. This was already tested in the U.S. and failed due to resistance from the medical area and some concerned mothers.”

While product innovations are often initiated by the consumer product powerhouses, such as P&G and K-C, smaller brands are also developing innovation, especially innovation that targets niche areas. “National brands have a significant role in creating new requirements for the market and for the industry,” Mr. Richter said. “Some small producers such as Absormex are breaking the mold, introducing their own new ideas. Drypers introduced aloe vera and baking soda a few years ago and, while nobody followed the use of baking soda because its reduces the performance of the superabsorbent polymer, most companies have incorporated aloe.”

So, there is no question among disposable diaper manufacturers that innovation is the key to success in this segment. In fact, the fight for innovation has become so fierce that companies are becoming more protective of their patents than ever before. “In the future, we believe that the diaper manufacturers that are the most innovative and focus on improvements that deliver the real, meaningful benefits that consumers want will be most successful,” K-C's Mr. Scott said. “For example, K-C has introduced highly breathable outer covers on Huggies diapers to help keep air flowing near the baby’s skin so the diapers deliver the skin health benefits that parents desire. These improvements have been key to the continued marketplace success of Huggies.”

In a perfect world, this innovation will not only mean increased sales for diaper manufacturers but also greater comfort for babies and better peace of mind for parents. “Our goal is to improve the lives of our consumers,” P&G’s Ms. Jones said. “We make every attempt to listen to our consumers in order to make products that meet their needs. Parents expect diapers that don’t leak and we strive to exceed their expectations with diapers that don’t leak and offer additional benefits.”

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