Competition Afoot In The Diaper Market

By Carlos Richer, Richer Consulting | January 3, 2007

Producers too focused on the fight for marketshare to concentrate on technology changes

The past year has been another difficult one for the diaper industry worldwide. With just a few exceptions such as China, North Africa, some parts of India, the Eastern European region and maybe one or two countries in Latin America, producers nearly everywhere else have seen problems such as extremely competitive prices in the markets. I believe we will get a short break from this competition during the next few months and that should be good news for the industry in general. This should translate into better profits for everyone, in part due to the normalization of the superabsorbent polymer supply, which now is experiencing some excess capacity in terms of the acrylic acid as well as a continued trend in the reduction in the cost of oil after the winter season has passed.

After visiting many underdeveloped markets worldwide, I have been able to detect similar problems that are being experienced by most of the small diaper producers in these regions of the world:

Straight To The Core

There seems to be a complete lack of attention among diaper producers to the core of their business, which ironically is the absorbent core—the most expensive part of the diaper. Most small diaper factories disregard the effect of the basis weight gradient along the length of the absorbent pad, which in fact is extremely important in terms of diaper manufacturing costs as well as in the perception of performance as experienced by the user. The reaction of fluids within the diaper core relates directly to the pressures applied by the user, resulting in higher hydraulic pressure at the back of the diaper in comparison to the front. This is the reason why you do not want to use too much absorbent material in the back of the diaper that is subjected to the highest pressures.

Most companies—and some of them not small—are using the same old technology that they have been using for the last 10 or 20 years. The end result is they have been spending more money on superabsorbent polymers and pulp to achieve a similar level of absorbency. Even some of the simple tasks—those that do not require capital investment-such as controlling the standard deviation for the diaper weight and diaper pad distribution in the pocket (symmetry during formation) are unattended. I would like to stress the fact that diaper quality is perceived by the performance of the worst diaper inside the bag, not the average, as many people seem to think. If you really wanted to compare diaper performance between several brands, the best suggestion I can give you is to choose the worst diapers in each bag and then run the comparative tests. If a diaper works well, there are no complaints. It is when the diaper does not do its job that you get the attention of the user. The lack of process control that results in quality variations during the manufacturing process simply translates into lower performance or higher costs.

Performance Parameters

Another common problem experienced in developing markets is a lack of understanding of the connection between the different diaper performance variables. There seems to be an overemphasis on the concept of total capacity, almost as if this variable by itself was the only one worth measuring, when in reality it is the one with the least correlation with consumer satisfaction. The absorbency underload and the surface rewet in combination with strike-through time have a much larger effect on the user’s perception of the diaper's absorbency. The absorbency underload has a nice correlation with probability of leakage, and the second or third rewet both have a nice correlation with comfort and absorbency perception. Amazingly, many diaper producers do not even measure the absorbency under load and many times just play with the ratio of SAP/pulp to improve performance at the same total cost. Others focus on mixing the products in the pad former (for example the depth of the SAP within the core and the quality of the blend). Many small producers do not understand the importance of using an “infant test center” (a fancy name for a typical day care facility that has been converted into a test center by using a simple standard measuring methodology). This is one way to test diapers in a professional way without relying solely on the lab. Because mothers in these regions are poor, most will be happy to sign their babies up for a diaper performance study in exchange for free diapers.

ADL Misuse

The misuse of the acquisition/distribution layer (ADL) seems to be another problem. Again, the lack of confirmation with the end user many times results in poor performance or higher-than-expected costs and many diapers are at times using a heavier ADL than needed for a specific diaper design or other times not using an ADL when it is imperative. Some regions have not updated their machines to use a cut-and-place applicator for the ADL (to allow for the use of a patch). Instead, they end up using a full length ADL because it’s easier to do what is not only more expensive but can also promote leakage at the ends of the pad.

It can be argued that the use of a continued ADL could be better than not using anything at all, however I was surprised to see that in Brazil many factories have been able to get away and even force those that have invested in the cut and place capability to also use a full length ADL with the argument that a “short patch” features less quality than the full length. Of course, this is nonsense when you look at the entire super premium diapers of the world. All of them share the use of a cut and place patch instead of the full length ADL.

Communication Failure

One last problem of the small diaper factories is the lack of links or connections with other factories. Some feel that their processes and technologies have to be kept top secret, when in reality most of the time they are jealously guarding obsolete technologies. Sharing this information can be one of the ways to keep informed about what is happening in other markets—a way to apply the knowledge to your own market. Most wars were won because people understood the principle that the enemy of my enemy is my friend.

Different Strokes

Some of the clear trends in the baby diaper market are the use of a “reduced chassis” instead of the full width diaper as well as the use of an even higher tri-dimensional core design. Take a look at the pad for the latest Pampers Baby Fresh product launched in July 2006 against the light. Developed markets are using highly elastic ears, while in the developing markets they are using nonwoven ears without any elasticity in the economic segment. A new product launched in Colombia by Kimberly-Clark in the Andean region, the Huggies Natural Care and Active Sec use a reduced chassis. The use of printed backsheets is also becoming popular in all market segments.

The replacement of cloth-like material as a backsheet (a lamination of PE plus spunbond) instead of PE film is also becoming popular in the developing markets, even in the lowest economic segment as the mother's perception that a cloth-like diaper is more comfortable for the baby gains inertia. Because they assume the baby is more comfortable wearing a cloth-like diaper, they feel bad purchasing a diaper that they feel will be less comfortable.

On the other hand, the concept of breathability has not grown as well in many developing markets, except for some Asian regions. This is because people in these areas question the need for a breathable disposable diaper when they already believe a cloth diaper is breathable. Cultural differences also have an impact on this feature. While Japanese mothers need to know that the baby is wet (a breathable diaper makes the diaper easier to detect), in other areas they are more interested in making the diaper last as long as possible to save money. I have seen some independent companies in the developing world produce diapers with good performance, even in places where we have not expected this. The Anerle Slim, made by Hengan International in China, is a good example, while in Eastern Europe, Ontex has launched some low cost alternatives with good performance. It will be interesting to see which companies are willing to learn from their competitors and also invest into their own research and how many are able to understand that this dynamic market requires product development in order to survive.

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