The Hygiene Market: A Tale Of Two Cities

By Karen McIntyre, Editor | December 4, 2006

component suppliers balance innovation and pricing pressures

With estimates putting the size of the global hygiene market at at least $42 billion, the opportunity for large volumes that this segment can provide its suppliers makes it an attractive one. However, increasingly tightened margins as well as strong competition can make it difficult to achieve success in hygiene.

Therefore, the makers of tapes, closures, films, backsheet and topsheet material, superabsorbent polymers, elastics and the many other components of a typical hygiene product are constantly trying to balance innovation with cost effectiveness while looking for new areas, both from a regional and market perspective to grow their products.

In North America and Western Europe, performance needs have been met in hygiene products and manufacturers are by and large looking for innovation in the form of process improvements and raw material reductions to trim costs while maintaining performance. But, that’s not to say that the hygiene market is impervious to design improvements. Just this fall, Kimberly-Clark upgraded its Huggies Supreme diaper line with the launch of Huggies Supreme Gentle Care, in sizes newborn, one and two, and Huggies Supreme Natural Fit diapers, in sizes three through six. For smaller infants, the new line offers improved softness while for older babies and toddlers, a new hourglass shape and 10% increased thinness improve fit and make a diaper feel more natural.

Beyond softness and fit, skin protection is another feature being improved upon by hygiene manufacturers. As diapers and other disposable goods increase their absorbency, they can be worn longer and they must remain breathable and comfortable on the wearers’ skin. “Most of the improvements being striven for in hygiene center around fit, softness and skin protection,” explained Jose Pina, global market director, health and hygiene for Dow. “I believe there is a critical role for nonwovens to provide solutions to answer these long-term goals. This won’t be immediate. It will take the industry some time to get there.”

In developed areas such as North America, Western Europe and Japan, hygiene products including baby diapers, feminine hygiene and adult incontinence are highly penetrated and characterized by slow growth rates. A surplus of diapers in warehouses throughout both North America and Western Europe has made price increases in this market near impossible. This competition has made it difficult for the small to survive in the diaper market. With companies like Procter & Gamble or Kimberly-Clark being able to wreak havoc on a market with one simple promotion, smaller companies have very little chance in the market.

This monopoloy has trickled down to component suppliers who have only a handful of customers to serve. According to industry experts, the turnaround on inventory orders is shorter than ever in the market. Add to this new diaper machine installations in emerging markets and competition in the diaper market is being seen as stronger than ever. Additionally, mass retail chains such as Wal-Mart have prohibited companies from increasing diaper prices. Retailers consider diapers a loss leader, feeling that consumers will come to their stores for inexpensive diapers and, while there, do the rest of their weekly shopping.

These market factors of developed regions have made other parts of the world incr
easingly popular for component suppliers. With more than two-thirds of the world population untapped when it comes to disposables usage, there is still plenty of room for growth, said Dow’s Mr. Pina. “There is a lot of potential for development,” he said. “Even in North America, there are certain parts that are very attractive, like adult incontinence. Anywhere that growth is higher than GDP rates is an attractive place to be.”

The attractiveness of these developing regions has led many suppliers to open up shop there. These new sites offer manufacturers a lower cost operating base as well as closer proximity to these growing markets.

“The hygiene market is quite difficult,” said Thomas Goeller, sales and marketing manager for closure specialist Koester. “If you just look at the European market, there is a lot of overcapacity. The big retail chains are easily switching from one diaper producer to another and costs are under a lot of pressures.”

This situation has also influenced Koester to look beyond developed regions for growth. The company has already formed a subsidiary in Mexico to lower its cost base for supply in North America and to also target emerging markets of Latin America. Additionally, the company will open an Asia-Pacific subsidiary sometime next year.

The Asia-Pacific region is also on closure specialist Aplix’s radar. Earlier this year, the company, which already operated sites in the U.S. and France, opened a manufacturing site  near Shanghai, to service the growing Asian-Pacific market. “There should be good long-term opportunities for companies positioned in higher growth markets in the Asia-Pacific area, China, India, Latin American and Central and Eastern Europe,” said David Keough, vice president of marketing and sales. “Customers in more mature markets are constantly focused on cost optimization and suppliers are trying to innovate in terms of raw materials and process improvements to add more value. “To grow your challenge is to offer better value, often defined as the same or better performance at a lower price.”

Much of this innovation, therefore, is geared toward raw material utilization and process optimization.

Also looking at Asian growth is Pantex, which has struck an agreement with Japanese fiber supplier Chisso to make advanced perforated products for both baby diapers and feminine hygiene items in China. A leader in both air through and bicomponent technologies, Chisso is allowing Pantex to push the envelope as to where a nonwovens can go, said  James Cree, Pantex CEO. These products will target Asian markets of Korea, Taiwan and Japan, which are extremely sophisticated in terms of diaper design.

Focus On: Fit

Six years ago Procter & Gamble raised the bar on fit when it launched its Pampers Cruisers line of diapers in sizes three to six. Designed to move with crawlers and toddlers, these diapers incorporate more stretch than ever and P&G’s success with this line has encouraged a whole new way of thinking in elastics. Where once spandex threads were incorporated only in leg cuffs and waist bands of pull-up style diapers, now elasticity is being incorporated throughout the diaper, requiring stretchable components beyond threads such as stretchable films, nonwovens and nettings and now suppliers of components not traditionally requiring stretch count elasticity among their main performance goals.

Closure specialist Koester has added an elastic closure tape for baby diapers to its product line. Easy Flex provides all-time elasticity and unique tear resistance and allows the tape to be as small as 25 mm or one inch to save costs while still adding elasticity. Koester is so bullish about this product that it is even supplying the elastomeric as a raw material to be added to the side panel of the diaper. “The use of EasyFlex as elasticated tape allows our customers to add elasticity to their side panels without investing in the elastomeric technology," Mr. Goeller said.

Mr. Goeller added that the need for elasticity in tapes has been brought on by changing diaper designs, in addition to the need for better fit. “One big change is that the diaper has gone from a T-shape to a rectangular-shaped pillow,” he said. “This has required elastics to be incorporated into the ear panels of the diaper. The problem with this is it has required our customers to reconfigure their diaper lines to incorporate this feature.”

Also adding stretch to the diaper sides is Tredegar Film Products,s which has recently extended its original product line of StretchTab laminates, a combination of elastics, nonwoven and hook fastener used as side tab closures for baby diapers and adult incontinence products, with two new economical solutions. StretchTab laminates PSA, with pressure sensitive adhesive, are designed for immediate converting onto diaper lines. StretchTab laminates Y-Bond were developed for side tab closures that require additional attachment strength. Tredegar has also added a new elastics production line located at its plant in Rétság, Hungary.

Steve Kluck, Tredegar’s global product manager-elastics, said: “StretchTab laminates are made with Tredegar’s industry and consumer proven FabriFlex elastic laminates. They’ve been successfully used in more than 20 billion diapers worldwide for low, medium and high stretch applications.”

Stefano Lupi, Tredegar’s managing director—Europe, said: “Our expanded capabilities and investment reflect our focus on our customers’ needs for innovative solutions at the right price. Consumers want reliable stretch and a comfortable, soft fit. These enhancements provide our customers with a wide range of cost effective elastic solutions.”

A key challenge facing manufactures to incorporate stretch into new areas of the diaper is the ability to add elasticity in the cross direction, a goal that is being met with a number of new products. One of these is Rebound stretchable netting, offered by Conwed Plastics. Ideal for baby diapers and pull-on style training pants, this product’s attributes include breathability and an ability to stretch in all directions. It can replace single-strand spandex fibers, which break and impact the appearance of the diaper and has allowed private label suppliers to find something that works without stepping on other patents. Additionally, netting, in place of individual strands, can be more efficient for machines because rethreading is not needed after breakage.

Also seeing increased usage in the hygiene market are stretchable nonwovens, which have been under development for several years but costs have been prohibitive, according to industry experts. Dow is hoping to  solve this problem with its Infuse product, which improves cost efficiency by bridging  the gap on performance between currently available random polyolefinic elastomers and styrenic block copolymers and responds to the need for lower cost options for stretch in the hygiene market. “The issue with elastics today is not necessarily performance,” said Dow’s Mr. Pina. “Performance has been met. The issue now is cost. How can you provide the same performance elements and features at a more cost efficient proposition.”

And, while stretch is being added to a number of components throughout the hygiene supply chain, spandex manufacturers continue to maintain a strong role in diapers. RadiciSpandex began focusing on the hygiene market about two years ago to help it regain business lost to the apparel industry’s migration into China. “Hygiene has been an excellent way for us to diversify and it’s a lot steadier than textiles and apparel, which changes with fashion trends and seasons and has tremendous competition with China.”

Also beneficial has been spandex’s increasing role in the baby diaper where it is found in waist bands, leg cuffs and, to a lesser extent, in stretch tabs. Innovation efforts here include reducing deniers without increasing breaks and increasing the longation of the product, which increases the run time. Higher longations basically save diaper manufacturers money, Mr. Moran explained.

Another spandex supplier, Hyosung has seen a great deal of growth since deciding to target the North American hygiene market a few years ago. The Korean company had already been quite successful in world regions beyond North America.

“The market continues to grow, thus increasing the quantity of spandex consumed, but a lot of this growth is coming from the large branded manufacturers, and they are extremely demanding on their suppliers,” said Greg Hearn, global business manager, personal hygiene. “As such, there is a great deal of effort to supply the highest level of quality at the lowest possible cost.  Those spandex suppliers that can provide the best combination of these two requirements will succeed in growing their business.”
Also benefiting spandex’s role in diapers are increasing rubber prices, which has led personal hygiene manufacturers to replace some of their rubber with spandex, opening up a number of opportunities, Mr. Hearn continued.
Key to Hyosung’s strategy in the diaper market is remaining cost competitive by supplying from relatively new facilities in both Korea and China. Operations in this region have been boosted recently through the acquisition of Tongkook, a spandex maker in southeast China, which will add 6000 tons of capacity to the company’s creora brand portfolio. According to executives, the acquisition is in sync with Hyosung’s vision of becoming the leader in spandex through continued investment and additional investment throughout North America and Europe will be forthcoming.

A Soft As A Baby’s . . .

As diapers become more absorbent, with higher acquisition and distribution rates, the softness of the topsheet and its ability to remain breathable have become important. This trend is evident in Huggies’ most recent diaper upgrade. The brand’s new Supreme Gentle Care diapers, designed for newborns, feature Cuddleweave, a new cottony-soft material that provide comforting and secure feel for babies. According to company literature, these diapers have 20% more quilted softness than previous Huggies Supreme diapers.

And, Huggies competitor Pampers has been offering a soft, apertured topsheet on its newborn line, Swaddlers for more than five years. Like its innovative Cruisers line for older babies, Swaddlers is a part of Pampers Baby Stages of Development line, which has been extremely successful for P&G. Until recently, cost constraints have kept Swaddlers’ apertured topsheet from being replicated on the market but Pantex is helping other diaper manufacturers add this feature to their diapers, which can help protect the nursing infant from loose and runny stool, with a cost-effective apertured topsheet.

According to Mr. Cree, one of the main challenges in incorporating the apertured topsheet has been finding a way to keep the superabsorbent gel from coming to the surface of the diaper. Pantex’s response to this challenge is the G2 laminate, a solution to this problem. Launched in November, the laminate is both gel- and glue-free and can act as a barrier for the gel while enhancing the overall performance of the diaper. The result is a soft, apertured material. “We are appealing to all of the areas that have been lacking innovation in terms of perforation for years,” Mr. Cree explained. “Anyone can put holes in a diaper, the challenge is punching these holes without making the nonwoven abrasive or crispy.”

Mr. Cree added that he is definitely witnessing a departure from the plain vanilla spunbond material to a softer, perforated topsheet. “This is really pushing diapers away from regular polypropylene spunbond material to a higher level. People who use it say it works,” Mr. Cree said. “P&G has been offering it for a number of years and now others are following.”

Meanwhile, Tredegar Film Product’s Comfortaire highloft nonwoven laminate, designed for the feminine hygiene market, is more like a fabric than  film and offers comfort with the required performance, according to executives. Tredegar had been combining nonwoven and film technology since the early 1990s and market research conducted in 2002 found that women want softness and protection in a marriage of two products.

While the bulk of Tredegar’s film-based hygiene business is conducted  in the feminine hygiene market, the company sees the need for a hybrid  product like ComfortAire throughout the hygiene segment and Tredegar, like all companies participating in hygiene, is eager to meet the needs across the big three hygiene segments—baby diapers, feminine hygiene and adult incontinence. While the needs of this market vary to some degree, all three are guided by basic principles of fit, comfort and softness and component suppliers are eager to improve upon these attributes to help grow their share in this high volume market.                         

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