Sandra Levy , Associate Editor01.24.11
Mommy blogs are all abuzz with comments every time a new diaper is introduced or improved. Recession weary consumers are still scrimping on their purchases. And there’s a growing frenzy for ecofriendly and sustainable products. It’s no wonder that diaper makers are thinking out of the box in order to snag a bigger piece of the disposable baby diaper pie.
Indeed, the pie is worth vying for. Ian Butler, INDA’s director of market research and statistics estimates that the global diaper market was about $22 billion in 2010.
From launching innovative pulpless diaper designs to rolling out limited edition seasonal diapers to piloting online retail stores to creating cyber communities to partnering with fashion designers and celebrities to improving diaper brands to building new manufacturing plants to focusing on sustainability, the major players have given birth to a new generation of tactics in their fierce competition to wind up on baby’s bottoms.
Thin Is In
The most closely watched innovation in the baby diaper market this year is Procter & Gamble’s Dry Max pulpless diaper design. Launched in March, P&G claims the design offers improved dryness and absorbency while being 20% thinner than previous generation diaper designs. Introduced through P&G’s premium tier diaper brands, Swaddlers and Cruisers, DryMax is said to reduce the weight of a billion diapers going into landfills every three years.
To celebrate the launch of Dry Max, P&G hosted a shindig in New York City with a roster of celebrities and their families. Despite all the media hoopla that marked DryMax’s debut, it wasn’t long before the social networks and mommy blogs began to explode with harsh criticism that the diaper was causing itching, burning and diaper rash.
These claims were put to rest after a comprehensive review by the U.S. Consumer Product Safety Commission (CPSC) and Health Canada found no link between Pampers Dry Max diapers and diaper rash or other skin conditions.
In order to combat the negative publicity and educate parents, P&G announced it was sponsoring the distribution of comprehensive educational materials produced by the American Academy of Pediatrics (AAP) that provide detailed information on the care and treatment of infant skin conditions including diaper rash.
“Starting in early 2010, P&G mounted a very aggressive public relations response to defend the safety of Pampers Dry Max, which went beyond what they have normally done to address consumer concerns about new products. P&G considers that issue basically behind them now and they continued their rollouts on schedule,” said Pricie Hanna, vice president of industry consultancy John R. Starr, Inc., adding, “P&G rolled out officially in the U.S. and Canada in March but it was already on the market in unmarked premium packages at the beginning of the first quarter. They progressively rolled it out in Western Europe last summer and started to roll out Pampers Dry Max in parts of Eastern Europe and the Middle East last fall. We expect them to complete the global rollout in the premium tier products around the world this coming year,” said Ms. Hanna.
The negative publicity in the press temporarily dampened P&G’s initial marketshare growth shortly after the Dry Max launch, but P&G is continuing to show progress and the company has seen recent share gains in the premium diaper category, according to Ms. Hanna. “The Dry Max product design is a significant innovation. It’s a success in the marketplace and it will gradually be rolled out globally in the premium category. The industry is waiting to see if and when P&G will take the technology into its other diaper tiers,” said Ms. Hanna.
While branded and private label diaper competitors may eventually invade P&G’s pulpless diaper turf, Ms. Hanna said competitors are challenged by P&G’s intellectual property barriers for the Dry Max composition and design. “It’s the 20% bulk reduction without compromising performance that is the accomplishment here. Because the 20% bulk reduction is a big gain for the retailer, it potentially gives them a 20% increase in their turnover, i.e. return per square foot of shelf space. If they can optimize their shelf space for the new packaging, that’s a big win for them. It’s also part of the sustainability claim. The retailers are not going to give up this opportunity for greater returns on their shelf space. Over time we expect retailers to press their private label suppliers and other diaper competitors to accomplish this bulk reduction. We see more momentum around alternative ways to accomplish this bulk reduction. Over the last 25 years there has been a trend of gradually making diapers thinner and thinner. But we have a step change here which indicates that in the next couple of years we are going to see an acceleration of the reduction in bulk of hygiene products,” said Ms. Hanna.
The acceleration in the reduction in bulk products is being deterred by a superabsorbent shortage, explained Ms. Hanna. “Increasing the amount of superabsorbent is essential when you take out soft pulp to reduce bulk so regardless of what absorbent core product design structure you use, you will need more superabsorbent. We think that diaper producers are getting the superabsorbent they’ve originally contracted for. It’s the problem of increasing the amount they were getting that is holding them back. It’s been particularly difficult for the private label segment because the private label manufacturers have had an opportunity to gain more sales volume during the recession. The superabsorbent crisis has limited P&G’s diaper competitors from rapidly following the P&G innovation. It has kept adult incontinence products from increasing their superabsorbent compositions to produce thinner products,” said Ms. Hanna.
Mr. Richer took Ms. Hanna’s thoughts one step further. “The big trend in developing countries is trying to clone the pulpless diaper, like Dry Max. In the U.K. there’s a private label fluffless product. A company in Spain and Portugal, Arbora & Ausonia has launched a product with a much higher level of absorbency that is basically pulpless. There are more potential “cloners” who are still waiting to make sure the Dry Max product is well accepted,” said Mr. Richer.
Diaper makers don’t want to take the risk of introducing a very thin diaper into some of the less developed markets because the local culture still believes that a thicker diaper is better, said Mr. Richer. “Unless the big multinationals, like P&G, K-C and SCA are willing to spend the resources to educate the market that a very thin diaper is good, they will continue to wait,” he said.
Natural Is A Fave
Parents are increasingly demanding products with natural ingredients that are kind to their baby’s skin and to the environment and diaper makers are taking this trend very seriously.
K-C’s latest innovation is Huggies Pure & Natural diapers. The super premium diaper is hypoallergenic, latex and fragrance free and features a breathable outer cover that includes organic cotton. The liner includes natural aloe and vitamin E and materials from renewable sources, and the product's outer packaging is sourced from 20% post-consumer recycled materials.
According to Keegan Coulter, brand manager for Huggies in the U.S., research and development into more environmentally friendly diaper offerings continues to be pursued. “There is consumer interest in a fully biodegradable diaper, however to be commercially viable, any biodegradable offering must perform at current levels and deliver on the critical need for leakage protection and comfort. Currently, available technology and the existence of materials in sufficient quantities to deliver such an offering have not been developed. Delivering to market a disposable diaper that has minimal impact on the environment is something everyone in our industry is working toward. Huggies brand’s introduction of Pure & Natural diapers represents an initial step in being able to offer a disposable diaper that incorporates natural materials to deliver a high level of comfort and leakage protection for babies, while also delivering small steps toward minimizing environmental impact. Huggies brand recently partnered with TerraCycle to help reduce the impact our packaging has on the environment.”
New and Improved
As the diaper market grows more competitive, there appears to be no letup in sight for launching “new and improved” baby diapers as manufacturers upgrade existing lines to woo new customers.
K-C is in the process of rolling out a softness improvement for its Huggies little snugglers diaper.
“A softer outer cover and new pad are being implemented on Huggies brand Little Snugglers diapers to deliver a more cushiony soft experience. This is a soft roll out across all Little Snugglers sizes that will be complete by December 2010,” said Mr. Coulter.
K-C recently implemented several improvements for its newborn diapers. A new fastener shape, with more rounded edges was implemented in October 2009. A sizing improvement was completed in April 2010 that reduced diaper and pad length to improve leg fit. Larger Umbilical Cord Cutout (UCC) dimensions were also completed in April 2010. The company’s Huggies brand Little Snugglers diapers already has a wetness indicator on sizes Premie and Newborn to help moms easily know when the diaper is wet. In the first quarter of 2011 K-C will extend its Wetness Indicator feature to Little Snugglers sizes one and two.
Meanwhile, Supervalu Inc. rolled out new and improved Baby Basics diapers, offering better leak protection, improved fit and a “comfier, extra-soft interior.”
Commenting on the slew of improved products that diaper manufacturers keep churning out, Ms. Hanna said, “This is a category where improvements are constantly introduced. The real question is, which improvements are perceived by consumers as something that they really value so they start to say, I’m going to buy this brand.”
Ms. Hanna said it’s common for consumers today to buy their preferred brand when they have promotional pricing opportunities, such as a coupon or shelf price promotion. If there’s no promotional price for their favorite brand, they often choose a private label product, which they’ve tried and find to be acceptable.
Limited Editions
Offering limited editions of brand name diapers is another recent tactic that diaper makers are employing to get parents hooked on their brand.
Last summer, K-C launched Huggies Little Movers Jeans diapers, which feature a pigmented polypropylene coverstock material designed to resemble denim jeans. They were rolled out in the U.S. in a limited launch and were available only until the end of July.
Mr. Coulter said, “In 2010, the launch of Huggies Little Movers Jeans Diaper brought both fashion and design to the forefront of the category. We believe this trend will continue and that diaper designs and aesthetics will increasingly parallel what’s happening in apparel. In launching our Huggies Little Movers Jeans Diaper, we leveraged best practices from other regions of the world. From the product to the commercial idea, we saw this as an opportunity to drive style in a category that is known for plain white aesthetic and functionality-focused advertising. Retailers and moms loved the product and we do have plans to repeat our jeans commercial program next year. We even saw a surge of grandparents purchase the category this year as evidenced by some of our shopper data.”
Procter & Gamble has also jumped on the limited edition brand wagon. In July, the company joined forces with renowned fashion designer Cynthia Rowley to create Pampers by Cynthia Rowley. Available in 11 colorful styles for boys and girls, the diapers were launched in Target stores and on Target.com.
Not standing on the sidelines, last spring diaper manufacturer Libero launched a special Football Collection for its Up&Go diapers. The diapers had five different designs that were inspired by different teams, and a special football design on the packs.
“This is the fourth time we have had different limited editions on diapers,” said company spokesperson Mette Thorese, adding, “The Libero limited editions are competitive and innovative concepts that really prove our market leadership in the premium diaper segment and help us further build our baby business. The spring collection campaigns play an important role in our marketing strategy. Libero has approximately 60% volume share in the Norwegian market and approximately 80% of the pant segment, which Up&Go is a part of.”
Ms. Hanna believes that limited edition baby diapers with outer covers decorated with seasonal designs are more than just a fad. “They are a successful strategy to stimulate impulse buying and to give consumers diapers that more closely resemble clothing,” she said.
New Rules
Forget the Welcome Wagon. The days that a cheery sales rep came calling with a basket laden with diaper samples and coupons as a dominant means of promotion are gone.
Diaper makers are giving new meaning to the phrase, think outside of the box and they are using a plethora of attention grabbing tactics in their advertising and marketing plans to rattle the diaper market.
K-C is relying on online engagement through social media, including Facebook, Twitter and its own loyalty site. “We are using extensive shopper marketing testing through our unique programs with our retail partners and our virtual reality simulation technology. We are able to understand exactly what parents see and experience when shopping; therefore we’re better able to design our packaging and in-store displays to attract attention and communicate clearly to our consumers,” said K-C’s Mr. Coulter, adding, “At Kimberly-Clark, we employ a very integrated marketing approach—modifying our mix to take money away from traditional channels and invest more heavily to where moms are today. Social media are the predominant ways moms are taking in messages, and our marketing is changing to reflect that. From shopper marketing to packaging to digital to advertising to loyalty programs, we make every effort to be where Mom is—meaning, she will be able to interact with our brand on many levels including prenatal outreach. We have a direct mail program to new moms throughout each of the trimesters and it continues through her journey with baby; Huggies in-hospital network in maternity wards; Enjoy the Ride Loyalty program; cause-related efforts including MomInspired and Every Little Bottom; traditional television and print advertising; and digital online chatter.
Not to be outdone, P&G recently upgraded its web site for pregnancy.pampers.com, creating a virtual village. “From picking a name to preparing for all the physical changes that come alongside being pregnant, being an expectant mom can often be an emotional ride. Pampers Village, a leading online resource for families, aims to calm those pre-parenthood nerves by providing moms-to-be with insights and tips from the most credible source possible, real moms!” stated P&G on its web site.
E-Commerce Growth
Shoppers, especially new parents are seeking convenience and are increasingly flocking to online sites in favor of brick and mortar establishments to order products. Diaper makers have reacted to this trend in order to differentiate themselves from the pack.
“In the last year or so there has been much more emphasis on actually having online stores built into the web sites. It’s no longer just marketing for the branded leaders. They are enabling you to order products and have them delivered directly to the home. That’s a convenience factor we don’t think that is something that baby diaper consumers will use extensively, but it’s a convenience to the new mother and therefore is a good marketing program because it ensures you start the mothers with your products or it’s a way parents can conveniently try a new product, design or specialty product design,” said Ms. Hanna.
In September, Pampers announced it was launching access to Facebook shopping capabilities via the Pampers Fan Page so parents could buy Pampers brand diapers and wipes (plus an assortment of other P&G brand products) via its Pampers Facebook page, a community of more than 350,000 fans.
The announcement came just a few months after the brand's success with its Facebook pre-sale of Pampers Cruisers with Dry Max, which sold out its 1000-pack allotment in less than an hour. Pampers was the first P&G brand to introduce a gateway to e-commerce shopping capabilities via a Facebook "shop now" tab.
Amazon.com’s November acquisition of diapers.com is yet another indication that online shopping for diapers is gaining traction. The announcement came as no surprise to diaper consultant Carlos Richer.
“For Amazon, the big diaper sales were very important. Diapers.com was growing very quickly and became a challenge to them. They decided to stop the challenge before it grew too large. If you look at how quickly they were growing, it made Amazon very nervous. And, they decided it was better to buy them than to face them later as a much larger competitor. This is still a high volume item so moving them is still not so cheap. You can have some advantages like consolidation in different warehouses in different areas of the country to minimize the cost of freight. Still, I think it will be an interesting challenge based on the fact that they were already growing and they already have the support of some of the big multinationals. It was clear that P&G and K-C also wanted to grow into this channel. It will be interesting to read this year’s market shares and see how much they were able to take away from the supermarket.”
Ms. Hanna wasn’t surprised about the acquisition either. “If you look at the business diapers.com was building it was only a matter of time. That is a channel worth watching. Amazon has not been particularly competitive in their pricing for diapers to date compared to Walmart, Sam’s Club or Costco. It will be interesting to see if they maintain the price structure of diapers.com. If Amazon builds enough volume scale leverage to be able to ship diapers directly to the consumer at the same price per diaper that consumers would pay if they went to a club store or Walmart, the company would significantly change the competitive dynamics in the retail channels,” she said.
Recession Woes
How has the global recession affected the baby diaper market?
Mr. Richer said in developing economies consumers are shifting from a premium to a value brand, or from a value to an economy diaper. “It doesn’t mean necessarily they will be changing to a private label, because sometimes even the multinationals are able to keep within their own range of products being offered. For example, in Mexico, K-C has products that sell in different market segments. So within the same K-C umbrella, consumers move from one to the next tier down just to be able to pay for it,” said Mr. Richer.
In Latin America, especially South America there is a shift away from brand name diapers to private label products. “Private labels are increasing their market share because people are not willing to spend so much money anymore,” said Mr. Richer.
Ms. Hanna expanded on Mr. Richer’s sentiments saying that brand leaders have launched successful efforts to contain the growth of private label in the U.S. “The spending that the branded leaders have done for advertising and marketing promotion which includes sampling, Internet site programs and celebrity promotions, has increased as a percent of the sales dollar. That’s a direct result of the need to work to defend their share positions from encroachment on the part of the private label category. This marketing investment has been successful because although the private label segment at the beginning of the recession grew to some extent, the growth basically leveled out and it did not continue as much as you might have expected due to the aggressive response of the brand leaders,” said Ms. Hanna.
Celebrity Power
Celebrities tout everything from cosmetics to cars. Why not diapers? To help demonstrate the thinner, sleeker design of Swaddlers and Cruisers with Dry Max, Pampers teamed up with designer Liz Lange, to create a limited edition diaper clutch specially designed for these new diapers.
Pampers also forged several high performance partnerships with world-class athletes and their families, including Super Bowl MVP Drew Brees and baby Baylen, Vancouver Olympic Winter Games speed skating medalist Chad Hedrick and daughter Hadley, and skeleton (forward-facing luge) World Champion Noelle Pikus-Pace and daughter Lacee.
Modernization and Expansion
Diaper manufacturers have been busy upgrading and modernizing manufacturing plants as well as building new plants in new geographical areas in order to forge ahead.
In June 2010, K-C held a grand opening ceremony of its first plant in Stupino, Russia, which is located near Moscow. The new state-of-the-art manufacturing facility features two Huggies brand diaper lines.
In August, First Quality Baby Products, LLC announced that it plans to modernize First Quality's absorbent hygiene manufacturing facilities in Macon, GA. Through its First Quality Retail Services, LLC affiliate, First Quality Baby acquired a Macon manufacturing presence with its April 2008 acquisition of Covidien Ltd's Retail Products Business.
Peering in the Crystal Ball
So where is the baby diaper market headed in the future?
Mr. Richer predicts there will be growth in the northern part of Africa. He also foresees the emergence of new players in Pakistan and India. “Recent legislation in India is forcing large traders to become diaper producers. The importation duty for diapers has increased 25% so there is a lot of motivation for the traders inside of India to become producers of diapers or face the risk of not surviving,” said Mr. Richer.
Ms. Hanna also expects continued growth in China and Asia. “Diaper market penetration typically starts slowly until consumers have sufficient disposable income, are exposed to advertising and have access to good distribution channels. In China, urban parents with rising standards of living have driven growth in diapers. We’re seeing similar trends in the rest of the emerging markets, particularly in Asia. Those economies are recovering more quickly than the U.S. and Canada and Western Europe. The emerging markets also have more opportunity for market penetration so that is where the growth is coming from in the global diaper category.”
Ms. Hanna also predicted that buying diapers in bulk, at a lower cost per diaper, will be a continuing trend. “U.S. parents are buying bulk packaged diapers in club stores, Walmart and the larger retailers, especially the medium size boxes of diapers they know will fit their baby for a long enough period of time to enable them to fully use a large count box. They realize they receive savings from bulk packaging. As a result, the local food chains are putting big boxes of these products on their top shelves. They are also following this bulk box trend,” said Ms. Hanna.
Mr. Richer believes that small diaper factories will make headlines. “The small and medium sized factories are trying to become more aggressive at taking risks and trying to differentiate themselves so we may see a few surprises from some small diaper factories. It was more comfortable to wait to see what the big guys were doing and try to clone them and try to find ways to get around the patent. This is a change.”
Finally, Ms. Hanna believes the industry should brace for a reduced bulk diaper design from K-C and P&G’s other competitors. “It will take some time to see exactly how P&G’s competitors achieve this objective. What we are convinced of is that the objective of taking more bulk out of the diaper, going to make the next level of thinness for diapers in the premium segment inevitable. Significantly thinner diaper designs will probably spread beyond the premium segment during the course of the next three to five years,” said Ms. Hanna. ❖
Indeed, the pie is worth vying for. Ian Butler, INDA’s director of market research and statistics estimates that the global diaper market was about $22 billion in 2010.
From launching innovative pulpless diaper designs to rolling out limited edition seasonal diapers to piloting online retail stores to creating cyber communities to partnering with fashion designers and celebrities to improving diaper brands to building new manufacturing plants to focusing on sustainability, the major players have given birth to a new generation of tactics in their fierce competition to wind up on baby’s bottoms.
Thin Is In
The most closely watched innovation in the baby diaper market this year is Procter & Gamble’s Dry Max pulpless diaper design. Launched in March, P&G claims the design offers improved dryness and absorbency while being 20% thinner than previous generation diaper designs. Introduced through P&G’s premium tier diaper brands, Swaddlers and Cruisers, DryMax is said to reduce the weight of a billion diapers going into landfills every three years.
To celebrate the launch of Dry Max, P&G hosted a shindig in New York City with a roster of celebrities and their families. Despite all the media hoopla that marked DryMax’s debut, it wasn’t long before the social networks and mommy blogs began to explode with harsh criticism that the diaper was causing itching, burning and diaper rash.
These claims were put to rest after a comprehensive review by the U.S. Consumer Product Safety Commission (CPSC) and Health Canada found no link between Pampers Dry Max diapers and diaper rash or other skin conditions.
In order to combat the negative publicity and educate parents, P&G announced it was sponsoring the distribution of comprehensive educational materials produced by the American Academy of Pediatrics (AAP) that provide detailed information on the care and treatment of infant skin conditions including diaper rash.
“Starting in early 2010, P&G mounted a very aggressive public relations response to defend the safety of Pampers Dry Max, which went beyond what they have normally done to address consumer concerns about new products. P&G considers that issue basically behind them now and they continued their rollouts on schedule,” said Pricie Hanna, vice president of industry consultancy John R. Starr, Inc., adding, “P&G rolled out officially in the U.S. and Canada in March but it was already on the market in unmarked premium packages at the beginning of the first quarter. They progressively rolled it out in Western Europe last summer and started to roll out Pampers Dry Max in parts of Eastern Europe and the Middle East last fall. We expect them to complete the global rollout in the premium tier products around the world this coming year,” said Ms. Hanna.
The negative publicity in the press temporarily dampened P&G’s initial marketshare growth shortly after the Dry Max launch, but P&G is continuing to show progress and the company has seen recent share gains in the premium diaper category, according to Ms. Hanna. “The Dry Max product design is a significant innovation. It’s a success in the marketplace and it will gradually be rolled out globally in the premium category. The industry is waiting to see if and when P&G will take the technology into its other diaper tiers,” said Ms. Hanna.
While branded and private label diaper competitors may eventually invade P&G’s pulpless diaper turf, Ms. Hanna said competitors are challenged by P&G’s intellectual property barriers for the Dry Max composition and design. “It’s the 20% bulk reduction without compromising performance that is the accomplishment here. Because the 20% bulk reduction is a big gain for the retailer, it potentially gives them a 20% increase in their turnover, i.e. return per square foot of shelf space. If they can optimize their shelf space for the new packaging, that’s a big win for them. It’s also part of the sustainability claim. The retailers are not going to give up this opportunity for greater returns on their shelf space. Over time we expect retailers to press their private label suppliers and other diaper competitors to accomplish this bulk reduction. We see more momentum around alternative ways to accomplish this bulk reduction. Over the last 25 years there has been a trend of gradually making diapers thinner and thinner. But we have a step change here which indicates that in the next couple of years we are going to see an acceleration of the reduction in bulk of hygiene products,” said Ms. Hanna.
The acceleration in the reduction in bulk products is being deterred by a superabsorbent shortage, explained Ms. Hanna. “Increasing the amount of superabsorbent is essential when you take out soft pulp to reduce bulk so regardless of what absorbent core product design structure you use, you will need more superabsorbent. We think that diaper producers are getting the superabsorbent they’ve originally contracted for. It’s the problem of increasing the amount they were getting that is holding them back. It’s been particularly difficult for the private label segment because the private label manufacturers have had an opportunity to gain more sales volume during the recession. The superabsorbent crisis has limited P&G’s diaper competitors from rapidly following the P&G innovation. It has kept adult incontinence products from increasing their superabsorbent compositions to produce thinner products,” said Ms. Hanna.
Mr. Richer took Ms. Hanna’s thoughts one step further. “The big trend in developing countries is trying to clone the pulpless diaper, like Dry Max. In the U.K. there’s a private label fluffless product. A company in Spain and Portugal, Arbora & Ausonia has launched a product with a much higher level of absorbency that is basically pulpless. There are more potential “cloners” who are still waiting to make sure the Dry Max product is well accepted,” said Mr. Richer.
Diaper makers don’t want to take the risk of introducing a very thin diaper into some of the less developed markets because the local culture still believes that a thicker diaper is better, said Mr. Richer. “Unless the big multinationals, like P&G, K-C and SCA are willing to spend the resources to educate the market that a very thin diaper is good, they will continue to wait,” he said.
Natural Is A Fave
Parents are increasingly demanding products with natural ingredients that are kind to their baby’s skin and to the environment and diaper makers are taking this trend very seriously.
K-C’s latest innovation is Huggies Pure & Natural diapers. The super premium diaper is hypoallergenic, latex and fragrance free and features a breathable outer cover that includes organic cotton. The liner includes natural aloe and vitamin E and materials from renewable sources, and the product's outer packaging is sourced from 20% post-consumer recycled materials.
According to Keegan Coulter, brand manager for Huggies in the U.S., research and development into more environmentally friendly diaper offerings continues to be pursued. “There is consumer interest in a fully biodegradable diaper, however to be commercially viable, any biodegradable offering must perform at current levels and deliver on the critical need for leakage protection and comfort. Currently, available technology and the existence of materials in sufficient quantities to deliver such an offering have not been developed. Delivering to market a disposable diaper that has minimal impact on the environment is something everyone in our industry is working toward. Huggies brand’s introduction of Pure & Natural diapers represents an initial step in being able to offer a disposable diaper that incorporates natural materials to deliver a high level of comfort and leakage protection for babies, while also delivering small steps toward minimizing environmental impact. Huggies brand recently partnered with TerraCycle to help reduce the impact our packaging has on the environment.”
New and Improved
As the diaper market grows more competitive, there appears to be no letup in sight for launching “new and improved” baby diapers as manufacturers upgrade existing lines to woo new customers.
K-C is in the process of rolling out a softness improvement for its Huggies little snugglers diaper.
“A softer outer cover and new pad are being implemented on Huggies brand Little Snugglers diapers to deliver a more cushiony soft experience. This is a soft roll out across all Little Snugglers sizes that will be complete by December 2010,” said Mr. Coulter.
K-C recently implemented several improvements for its newborn diapers. A new fastener shape, with more rounded edges was implemented in October 2009. A sizing improvement was completed in April 2010 that reduced diaper and pad length to improve leg fit. Larger Umbilical Cord Cutout (UCC) dimensions were also completed in April 2010. The company’s Huggies brand Little Snugglers diapers already has a wetness indicator on sizes Premie and Newborn to help moms easily know when the diaper is wet. In the first quarter of 2011 K-C will extend its Wetness Indicator feature to Little Snugglers sizes one and two.
Meanwhile, Supervalu Inc. rolled out new and improved Baby Basics diapers, offering better leak protection, improved fit and a “comfier, extra-soft interior.”
Commenting on the slew of improved products that diaper manufacturers keep churning out, Ms. Hanna said, “This is a category where improvements are constantly introduced. The real question is, which improvements are perceived by consumers as something that they really value so they start to say, I’m going to buy this brand.”
Ms. Hanna said it’s common for consumers today to buy their preferred brand when they have promotional pricing opportunities, such as a coupon or shelf price promotion. If there’s no promotional price for their favorite brand, they often choose a private label product, which they’ve tried and find to be acceptable.
Limited Editions
Offering limited editions of brand name diapers is another recent tactic that diaper makers are employing to get parents hooked on their brand.
Last summer, K-C launched Huggies Little Movers Jeans diapers, which feature a pigmented polypropylene coverstock material designed to resemble denim jeans. They were rolled out in the U.S. in a limited launch and were available only until the end of July.
Mr. Coulter said, “In 2010, the launch of Huggies Little Movers Jeans Diaper brought both fashion and design to the forefront of the category. We believe this trend will continue and that diaper designs and aesthetics will increasingly parallel what’s happening in apparel. In launching our Huggies Little Movers Jeans Diaper, we leveraged best practices from other regions of the world. From the product to the commercial idea, we saw this as an opportunity to drive style in a category that is known for plain white aesthetic and functionality-focused advertising. Retailers and moms loved the product and we do have plans to repeat our jeans commercial program next year. We even saw a surge of grandparents purchase the category this year as evidenced by some of our shopper data.”
Procter & Gamble has also jumped on the limited edition brand wagon. In July, the company joined forces with renowned fashion designer Cynthia Rowley to create Pampers by Cynthia Rowley. Available in 11 colorful styles for boys and girls, the diapers were launched in Target stores and on Target.com.
Not standing on the sidelines, last spring diaper manufacturer Libero launched a special Football Collection for its Up&Go diapers. The diapers had five different designs that were inspired by different teams, and a special football design on the packs.
“This is the fourth time we have had different limited editions on diapers,” said company spokesperson Mette Thorese, adding, “The Libero limited editions are competitive and innovative concepts that really prove our market leadership in the premium diaper segment and help us further build our baby business. The spring collection campaigns play an important role in our marketing strategy. Libero has approximately 60% volume share in the Norwegian market and approximately 80% of the pant segment, which Up&Go is a part of.”
Ms. Hanna believes that limited edition baby diapers with outer covers decorated with seasonal designs are more than just a fad. “They are a successful strategy to stimulate impulse buying and to give consumers diapers that more closely resemble clothing,” she said.
New Rules
Forget the Welcome Wagon. The days that a cheery sales rep came calling with a basket laden with diaper samples and coupons as a dominant means of promotion are gone.
Diaper makers are giving new meaning to the phrase, think outside of the box and they are using a plethora of attention grabbing tactics in their advertising and marketing plans to rattle the diaper market.
K-C is relying on online engagement through social media, including Facebook, Twitter and its own loyalty site. “We are using extensive shopper marketing testing through our unique programs with our retail partners and our virtual reality simulation technology. We are able to understand exactly what parents see and experience when shopping; therefore we’re better able to design our packaging and in-store displays to attract attention and communicate clearly to our consumers,” said K-C’s Mr. Coulter, adding, “At Kimberly-Clark, we employ a very integrated marketing approach—modifying our mix to take money away from traditional channels and invest more heavily to where moms are today. Social media are the predominant ways moms are taking in messages, and our marketing is changing to reflect that. From shopper marketing to packaging to digital to advertising to loyalty programs, we make every effort to be where Mom is—meaning, she will be able to interact with our brand on many levels including prenatal outreach. We have a direct mail program to new moms throughout each of the trimesters and it continues through her journey with baby; Huggies in-hospital network in maternity wards; Enjoy the Ride Loyalty program; cause-related efforts including MomInspired and Every Little Bottom; traditional television and print advertising; and digital online chatter.
Not to be outdone, P&G recently upgraded its web site for pregnancy.pampers.com, creating a virtual village. “From picking a name to preparing for all the physical changes that come alongside being pregnant, being an expectant mom can often be an emotional ride. Pampers Village, a leading online resource for families, aims to calm those pre-parenthood nerves by providing moms-to-be with insights and tips from the most credible source possible, real moms!” stated P&G on its web site.
E-Commerce Growth
Shoppers, especially new parents are seeking convenience and are increasingly flocking to online sites in favor of brick and mortar establishments to order products. Diaper makers have reacted to this trend in order to differentiate themselves from the pack.
“In the last year or so there has been much more emphasis on actually having online stores built into the web sites. It’s no longer just marketing for the branded leaders. They are enabling you to order products and have them delivered directly to the home. That’s a convenience factor we don’t think that is something that baby diaper consumers will use extensively, but it’s a convenience to the new mother and therefore is a good marketing program because it ensures you start the mothers with your products or it’s a way parents can conveniently try a new product, design or specialty product design,” said Ms. Hanna.
In September, Pampers announced it was launching access to Facebook shopping capabilities via the Pampers Fan Page so parents could buy Pampers brand diapers and wipes (plus an assortment of other P&G brand products) via its Pampers Facebook page, a community of more than 350,000 fans.
The announcement came just a few months after the brand's success with its Facebook pre-sale of Pampers Cruisers with Dry Max, which sold out its 1000-pack allotment in less than an hour. Pampers was the first P&G brand to introduce a gateway to e-commerce shopping capabilities via a Facebook "shop now" tab.
Amazon.com’s November acquisition of diapers.com is yet another indication that online shopping for diapers is gaining traction. The announcement came as no surprise to diaper consultant Carlos Richer.
“For Amazon, the big diaper sales were very important. Diapers.com was growing very quickly and became a challenge to them. They decided to stop the challenge before it grew too large. If you look at how quickly they were growing, it made Amazon very nervous. And, they decided it was better to buy them than to face them later as a much larger competitor. This is still a high volume item so moving them is still not so cheap. You can have some advantages like consolidation in different warehouses in different areas of the country to minimize the cost of freight. Still, I think it will be an interesting challenge based on the fact that they were already growing and they already have the support of some of the big multinationals. It was clear that P&G and K-C also wanted to grow into this channel. It will be interesting to read this year’s market shares and see how much they were able to take away from the supermarket.”
Ms. Hanna wasn’t surprised about the acquisition either. “If you look at the business diapers.com was building it was only a matter of time. That is a channel worth watching. Amazon has not been particularly competitive in their pricing for diapers to date compared to Walmart, Sam’s Club or Costco. It will be interesting to see if they maintain the price structure of diapers.com. If Amazon builds enough volume scale leverage to be able to ship diapers directly to the consumer at the same price per diaper that consumers would pay if they went to a club store or Walmart, the company would significantly change the competitive dynamics in the retail channels,” she said.
Recession Woes
How has the global recession affected the baby diaper market?
Mr. Richer said in developing economies consumers are shifting from a premium to a value brand, or from a value to an economy diaper. “It doesn’t mean necessarily they will be changing to a private label, because sometimes even the multinationals are able to keep within their own range of products being offered. For example, in Mexico, K-C has products that sell in different market segments. So within the same K-C umbrella, consumers move from one to the next tier down just to be able to pay for it,” said Mr. Richer.
In Latin America, especially South America there is a shift away from brand name diapers to private label products. “Private labels are increasing their market share because people are not willing to spend so much money anymore,” said Mr. Richer.
Ms. Hanna expanded on Mr. Richer’s sentiments saying that brand leaders have launched successful efforts to contain the growth of private label in the U.S. “The spending that the branded leaders have done for advertising and marketing promotion which includes sampling, Internet site programs and celebrity promotions, has increased as a percent of the sales dollar. That’s a direct result of the need to work to defend their share positions from encroachment on the part of the private label category. This marketing investment has been successful because although the private label segment at the beginning of the recession grew to some extent, the growth basically leveled out and it did not continue as much as you might have expected due to the aggressive response of the brand leaders,” said Ms. Hanna.
Celebrity Power
Celebrities tout everything from cosmetics to cars. Why not diapers? To help demonstrate the thinner, sleeker design of Swaddlers and Cruisers with Dry Max, Pampers teamed up with designer Liz Lange, to create a limited edition diaper clutch specially designed for these new diapers.
Pampers also forged several high performance partnerships with world-class athletes and their families, including Super Bowl MVP Drew Brees and baby Baylen, Vancouver Olympic Winter Games speed skating medalist Chad Hedrick and daughter Hadley, and skeleton (forward-facing luge) World Champion Noelle Pikus-Pace and daughter Lacee.
Modernization and Expansion
Diaper manufacturers have been busy upgrading and modernizing manufacturing plants as well as building new plants in new geographical areas in order to forge ahead.
In June 2010, K-C held a grand opening ceremony of its first plant in Stupino, Russia, which is located near Moscow. The new state-of-the-art manufacturing facility features two Huggies brand diaper lines.
In August, First Quality Baby Products, LLC announced that it plans to modernize First Quality's absorbent hygiene manufacturing facilities in Macon, GA. Through its First Quality Retail Services, LLC affiliate, First Quality Baby acquired a Macon manufacturing presence with its April 2008 acquisition of Covidien Ltd's Retail Products Business.
Peering in the Crystal Ball
So where is the baby diaper market headed in the future?
Mr. Richer predicts there will be growth in the northern part of Africa. He also foresees the emergence of new players in Pakistan and India. “Recent legislation in India is forcing large traders to become diaper producers. The importation duty for diapers has increased 25% so there is a lot of motivation for the traders inside of India to become producers of diapers or face the risk of not surviving,” said Mr. Richer.
Ms. Hanna also expects continued growth in China and Asia. “Diaper market penetration typically starts slowly until consumers have sufficient disposable income, are exposed to advertising and have access to good distribution channels. In China, urban parents with rising standards of living have driven growth in diapers. We’re seeing similar trends in the rest of the emerging markets, particularly in Asia. Those economies are recovering more quickly than the U.S. and Canada and Western Europe. The emerging markets also have more opportunity for market penetration so that is where the growth is coming from in the global diaper category.”
Ms. Hanna also predicted that buying diapers in bulk, at a lower cost per diaper, will be a continuing trend. “U.S. parents are buying bulk packaged diapers in club stores, Walmart and the larger retailers, especially the medium size boxes of diapers they know will fit their baby for a long enough period of time to enable them to fully use a large count box. They realize they receive savings from bulk packaging. As a result, the local food chains are putting big boxes of these products on their top shelves. They are also following this bulk box trend,” said Ms. Hanna.
Mr. Richer believes that small diaper factories will make headlines. “The small and medium sized factories are trying to become more aggressive at taking risks and trying to differentiate themselves so we may see a few surprises from some small diaper factories. It was more comfortable to wait to see what the big guys were doing and try to clone them and try to find ways to get around the patent. This is a change.”
Finally, Ms. Hanna believes the industry should brace for a reduced bulk diaper design from K-C and P&G’s other competitors. “It will take some time to see exactly how P&G’s competitors achieve this objective. What we are convinced of is that the objective of taking more bulk out of the diaper, going to make the next level of thinness for diapers in the premium segment inevitable. Significantly thinner diaper designs will probably spread beyond the premium segment during the course of the next three to five years,” said Ms. Hanna. ❖