Incontinence, An Embarrassment Of Riches

March 15, 2011

Incontinence, An Embarrassment Of Riches

Incontinence, although still not a subject that sits easily with many consumers, is ironically the future for many of the world’s largest hygiene manufacturers in what they would consider their home or at least most profitable markets. Kimberly-Clark, SCA and Unicharm, the leading global players in the field, all find themselves incumbent in markets across Western Europe, North America and Japan, where the population is greying as the baby boom generation moves into retirement and beyond. In 2010, although economic problems persist, the market for retail incontinence products broke the $5 billion barrier for the first time and continued to see strong growth of around 8% (2009-2010). That said, sales of incontinence products are dwarfed when compared to other key categories such as nappies/diapers or key commodity products such as toilet paper, which both saw global value sales reach around the $35 billion mark in 2010. In fact, incontinence products, in spite of all their coverage born of impressive value growth, still only accounted for 7% of global value sales of hygiene products in 2010. This figure may be up from the 5% reported in 2000, but it is still far from the kind of stellar sales growth that booming nappy/diaper sales had in China and Latin America that have added an additional $15 billion over the past decade to that particular category.

Kimberly-Clark Caters To A New Generation of Adult Incontinence Sufferers

Category growth in adult incontinence is about 5%, thanks to 2% population growth as well as increased usage. The demographic most apt to use these products —those above 65 years old—is expected to grow from 40 million to 55 million between now and 2020, a 35% increase, and a similar rise is projected between 2020 and 2030. “This is definitely going to change everything in this country from healthcare to the products you see in the markets, even how stores will be laid out, said Mark Cammarota, Depend brand champion at Kimberly-Clark Corporation.

In its strategy for its Depend adult incontinence brand, K-C is looking at the new consumer of adult incontinence and what his/her needs will be as they reach this new life stage.

“Every time they hit a new life stage, they are demanding. The products we offer have to be a lot different. They are not going to settle for products that look like diapers,” Mr. Cammarota said. “They look at retirement differently than previous generations. For them, it’s a new stage of life.”

This concept shapes everything K-C does or says about Depend brand from advertising to packaging to the products themselves. “Everything we do is about people in our target—people who are younger and more active.These new users to our category are doing a lot of different things—new careers, volunteering, having fun. It’s changing the way people think about Depend brand products,” Mr. Cammarota said.

From a product standpoint, this has translated into products that are not like diapers, that look more like underwear. What is driving innovation is discretion. One year ago, K-C took its gender-specific underwear concept, launched two years ago, a step further with printed disposable underwear for men and women. In addition to looking and feeling more like traditional underwear, these products are packaged like the real thing, rolled up and placed in clear plastic, like Hanes or Jockey package their product.

Sold alongside other adult incontinence products, the products come in smaller six-count packages than more traditional incontinence items and are priced at about a 50% higher price point.

Mr. Cammarota said these products fit the bill for a disposable underwear product that looks like regular underwear but still performs well. “It still has to give them confidence. They want a product they can feel comfortable in,” he said.

Beyond disposable underwear, K-C has been focusing a lot of its energies on the pads segment, addressing concerns over light bladder leakage and educating sufferers on the advantages adult incontinence pads and shields have over using feminine hygiene items to address the problems. In fact, K-C’s Poise brand has launched a campaign featuring Whoopi Goldberg to help spread awareness.

Efforts like these, combined with the growing demographic, allowed the Poise brand to achieve explosive growth in 2010 posting double digit top line growth, said Poise senior brand manager Joe Kuester. “The brand achieved all time high market share results and was responsible for driving significant overall category growth. The Poise brand utilized Whoopi Goldberg to break down the stigma associated with light bladder leakage. Whoopi's humorous portrayals of several famous women of history allowed women to understand how common this issue is. By making the issue common, women were receptive to the Poise brand.”

And, to help educate new sufferers on this taboo condition, Depend brand has created a web-based tool describing its products and matching them with symptoms. Additionally, Depend brand is selling variety packs sample kits with a sampling of its products so consumers can use a variety of products with a minimum investment.“One of the things we have learned is that as people start to have a worsening condition, they are out there looking for information,” Mr. Cammarota said. “They are not too interested in talking to their friends abouttheir condition but what we find is they go to the store blind to look at product and find information.”

Although, in terms of global sales, incontinence products were clearly dwarfed in scale by nappies/pants, year-on-year growth during 2005-2010 did remain slightly higher than in the nappies/diapers category. In part, this was aided by the higher unit prices afforded by incontinence products sold predominantly in developed markets, compared to nappies/diapers, which saw the majority of recent volume growth in emerging markets such as China and Brazil, where unit prices are typically 30-50% lower. Incontinence also saw little of the unit price erosion inherent in other markets during the recession and posted 8% global value growth in 2010, which was significant given sales were concentrated in economies which were disproportionately affected by the global economic crisis. Across fast-moving consumer goods (FMCG) markets, economic difficulties forced a significant portion of consumers to trade down both in terms of the products they bought (private label booming as a result) and where they shopped (discount stores reported a bumper year in 2010). Whilst consumers looking for more cost-effective alternatives typified falling sales in tissues and wipes, incontinence products sailed on, apparently oblivious to these external pressures.

Grey Market Proves Recession Proof
Clearly, the underlying driver of growth came from the growing number of consumers in key developed

K-C has introduced gender specific disposable underwear that resemble the real thing.
markets such as the U.S., Germany and Japan, now looking at retail incontinence as a convenient solution to their ailments. This demographic trend has been reinforced by manufacturers’ own marketing efforts, which encourage sufferers to confront their problems and cast off the culture of embarrassment that often surrounds purchasing these products. SCA’s Tena brand, for example, used the ‘International Day of Older Persons’ as an opportune moment to sponsor an elderly festival in Estonia during October 2010 with the stated aim of ‘creating awareness about incontinence issues and breaking taboos in Estonia.’ In all key markets, advertising has largely normalized incontinence as a standard retail product and, with it, broken a barrier to broader usage.

The widening of the consumer base is only half of the story though, as a further key factor in 2010 saw sales in this category largely sidestep the recession. This was due to the fact that the key over 60-year-old age group was, on the whole, less badly affected by the recession than its younger counterparts, owing to the fact that baby boomers have already accumulated the majority of their wealth and (on the whole) made ample pension provisions during the long periods of economic growth seen since the 1950s. They have also been far less exposed to the banking crisis with their mortgages largely paid off. Indeed, the financial reality of the post-crash era has also seen many governments, who had found themselves in debt or with spiralling health insurance costs, such as Japan, look to offload these responsibilities onto consumers, which, while seeing the away-from-home channel grow around half as quickly as the retail channel during 2009 and 2010, has boosted over-the-counter (OTC) pharmacy products, as well as encouraged consumers to purchase their own incontinence wear privately rather than on prescription or provided free by state or health service provider. This has even been made mandatory in countries such as Russia.

China, Too Much Too Young

SCA’s new Bowling Green, KY site makes Tena adult inco products.
In terms of regions, Asia-Pacific continued to lead incontinence sales in 2010, with a 31% share of value sales. This makes for interesting reading in terms of how demographics and income trends shape sales. China, due to its mammoth population, which ran to 1.3 billion in 2010, is home to 23% of the world’s over 65-year-old age group, but value sales of incontinence products in China only account for 1% of the global total. While demographics are the key driver of demand, average per capita GDP still remains low in China as a whole, reported at $2586 in 2010, way below the $8000-10,000 normally thought to be prerequisite for incontinence products to develop a significant consumer base. While observers may point to China’s premier cities along its Eastern seaboard as having much higher rates of GDP than the national average, demand in cities such as Shanghai remains low.This is due to the extraordinary rate of rural-urban migration that has taken place over the past two decades, which has brought some 300 million (the largest migration in history) workers and, more importantly younger workers, from China’s interior thus skewing the demo­graphic profile and resulting in year-on-year double-digit growth for sales of nappies/diapers for more than a decade. While sales of incontinence in China might be somewhat disappointing, further economic development, the aging of its urban population as well as the opening up of the central regions should all provide for significant growth opportunities in the longer term.

SCA Tena Targets North America

Swedish producer SCA has been focusing heavily on global expansion, particularly in North America where the plant has recently invested in a new plant in Bowling Green, KY. According to the company, this plant, a $50 million investment, will make Tena incontinence care products for outlets such as Walgreens, Wal-Mart and CVS.

“We continue to see growth opportunities in the incontinence space on a global and local level,” said Bruno Zepeda, president of SCA’s Personal Care North America division. “In North America, we expect that the aging baby boomers will ‘change the game’ of what it means to retire by maintaining a more active and free lifestyle than previous generations. This will bring with it an increasing need for our products since they will not want anything to hold them back from the life they want to live – least of all incontinence.”

Most recently, Tena launched incontinence care plants, which are being billed as the obvious solution for active consumers who do not want bladder weakness to stop them from having a dynamic lifestyle. These pants contain SCA’s Body-Close Fit technology, based on improved elasticity to ensure that the product fits more closely to the consumer’s waist and belly and stays in place.

“SCA is very proud of its heritage and global leadership in this category, due – in large part – to our in-depth understanding and appreciation for the emotional and functional impact incontinence has on people’s lives,” Mr. Zepeda added. “We will continue to focus on developing innovations that are based on this unique understanding in order to make life easier for the millions of people who are affected by incontinence – men, women, their caregivers and healthcare facilities. We will also continue our advocacy and education efforts in order to break taboos, increase awareness and help people manage their condition so they can maintain the lifestyle they want.—KBM

Cultural Taboos Less Of A Barrier in Japan
Turning to Japan, which accounted for just 5% of the global over 65-year-old age group but accounted for a massive 25% of value sales in 2010, this country certain shows a huge potential for further growth. Although Japan is ranked 13th in terms of global GDP ranking, with $36,000 per capita in 2010, thus placing it in quite a different league compared to developing markets, this clearly indicates that a combination of high-income levels and a health service increasingly looking to force provision of health-related goods and services back on the consumer can lead to heady market growth. True, Japan is one of the most rapidly aging countries on earth, with an unusually long life expectancy, but the manner in which leading players in Japan such as Unicharm and Pigeon have developed incontinence into a mainstream product available in pharmacies, supermarkets and even convenience stores is indicative of a culture where the taboo of incontinence is far less pronounced than in the West.

Indeed, news that Unicharm has teamed up with SCA to begin producing Poise-branded incontinence products for the U.S. market in 2010 is an interesting development. It suggests that Japanese products, which are amongst the most advanced in the moderate/heavy sector, both in terms of size and absorbency/functionality, will be making their way to North America over the medium term. In Europe too, an earlier agreement between the two companies also saw the development of more compact products, which reaffirms that both regions offer further growth potential. New product development on the back of an aging population will see future value growth driven by the general upward movement from light sanitary protection (pads) to moderate to heavy sanitary protection products (pants). These have continued to drive Japanese sales, recession or no recession, and look set to be a key value generator over the next decade, well in excess of in emerging markets, such as China, which offer much more of a long-term goal.

The Future Is Now

K-C is addressing the needs of a new adult incontinence sufferer with recent product launches.

Although China appears to be a long-term target, recent activity, especially by SCA in South America and Russia, suggest the move to establish a presence in take-off markets. Purely in terms of forecast rates of GDP, Russia, Poland, Turkey, Brazil, Argentina and Mexico all appear good medium-term bets for investment as average GDP is expected to break the $10,000 barrier by 2015 and their over 65-year-old populations are set to expand rapidly. This potential is born out in SCA’s recent activities, acquiring local players in Mexico and Argentina to secure its broader hygiene effort in South America. This supplemented the opening of a new plant near Moscow, which can potentially supply Russia and Eastern Europe. While like China, the sheer size of Russia and Brazil poses questions over distribution and access to consumers, growth in more easily accessible urban areas is likely to be such that they will easily accommodate expanded supply.

While companies such as Unicharm and SCA make a bid for overseas expansion, the ‘bread and butter’ of their business remains Western Europe, the U.S. and Japan. While sales are expected to slow, the recent launch of Kimberly-Clark’s Poise brand in printed underwear styles is a glimpse into a future where incontinence wear becomes little more than disposable underwear for the majority of sufferers and is sold and displayed as such, a far cry from the white nappy associations true of earlier products. Although the latest evolution of the Poise brand comes at a 50% premium, it will be a surprise if this format does not become standard for light incontinence sufferers over the next five years or so. The development of products which more closely resemble underwear must be the final word in the normalization of incontinence as a standard FMCG product.

Proof of this will come from how many elusive male consumers enter the sanitary protection market. Currently, penetration rates are proportionately lower in developed markets (at least judging by the incidence of urinary problems reported by doctors) than for women. Although men still represent a challenging marketing opportunity, there can be no greater motivation to manufacturers than looking at the Japanese market where, for cultural reasons, men have much less of a problem with purchasing these products or, at least, using them. As a result, per capita sales for the over 65-year-old age group continue to be far in excess of the West, even accounting for the extremely aged portion of the Japanese population, indicating that the lowering of cultural barriers to using incontinence is yet another growth opportunity in markets that might already be considered as being developed or maturing.

With opportunities abounding, companies involved in incontinence are set for a concerted period of expansion, with the likelihood that the lure of high-growth markets will tempt other large manufacturers, thus widening the field of what is currently a three-horse race.

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