Meanwhile, the new economic policies launched by the Indian government, which are designed to deepen economic reform, will shift its priority to develop underdeveloped areas, increase support to industries, especially to manufacturing industries, and the enhanced efforts to attract foreign investment. All these examples demonstrate India’s determination to continue its opening up of its domestic market. In addition, as English is one of the official languages used in India, the popularity of English enables India to access the most cutting-edge information technology promptly. Today, India continues to draw more and more attention from the outside world.
In India, the middle class is expanding, the number of women and infants are increasing, public health consciousness continuous strengthening, and purchasing power is gradually improving, which in turn will help the country to achieve a relatively high level of economic development. When the time comes, household paper and hygiene products will transform from being “luxury” items in the home into “necessities”, and as a result India’s huge market potential will be released, with immeasurable space for development.
Currently, India’s disposable diapers market penetration rate is below 30%, however, the number of middle-income earners is expanding rapidly at 30% a year on average, which is a good sign for market growth.
The major driving force of India’s baby diapers market includes multinational companies’ market cultivation, advertising campaigns via the internet, television and other media platforms, and the steady decrease of the illiteracy rate in the country. However, there are a lot of challenges in introducing baby diapers products in the market, which are primarily related to the consumption capacity and culture of the local consumers. On the one hand, Indian mothers misunderstand that cloth diapers are better for babies’ skin. On the other hand, local families prefer reusable products, and dislike waste. In many cases, baby diapers serve only as alternatives when people go outdoors.
Despite these difficulties, considering the average 26 million newborns in India every year, which is 1.6 times that in China, the baby diaper industry observers and foreign investors agree that the market potential is enormous. The leading global players’ aggressive contest here will heat up the competition in the coming years.
New investment in baby diapers market
Over the past three years, the Indian baby diapers market has increased rapidly, with an annual growth rate of 15%, providing enormous opportunities for international diaper manufacturers. Currently, the leading three brands in this market are Huggies, Mommy Baby and Pampers, which have divided up the bulk of the market share.
Small brands can only compete in low-priced regional markets. Key aspects of India’s baby diapers market include relatively low prices, the lack of large buyers and inconvenient transportation logistics. Furthermore, the import duties for these kind of products are extremely high, which lift the market entry threshold for foreign manufacturers. Also taking into consideration India’s vast territory and poor road conditions and other infrastructure problems, international manufacturers choose to build local manufacturing facilities so as to reduce costs and the time of distribution.
Through Hindustan Lever, a joint venture of Kimberly-Clark in India, the company has introduced products under the brand name of Huggies into the Indian market, followed by other products, such as Kotex sanitary napkins and Depend adult diapers. Since 1995, Procter & Gamble (P&G) has started to market diapers under the Pampers brand in India, and finally set up a plant to produce sanitary napkins under the Whisper brand.
In recent years, these major diaper manufacturers have invested to build new plants in India one after another. P&G, who has already gained a foothold in the Indian market, plans to invest more than US$1 billion in the next five years, with aims to change the diapers imported today to local manufacturing and sales, so as to catch up with Unilever, which ranks No. 1 in the Indian market.
Japanese manufacturer Unicharm set up their first diaper plant in India in 2010, and is currently speeding up its market expansion in India. With their second plant established in Chennai to be put into production in fiscal year 2014, their sales in India are expected to double by 2015, at about 10 billion Japanese Yen. Unicharm will also double its baby diapers and hygiene products production capacity in India. Considering the underdeveloped logistics network in the country, Unicharm needs to build its third plant as soon as possible to ensure its national sales coverage of diapers in India.
In addition, SCA plans to invest about Kr150 million for the production of nonwoven-based hygiene products in India, including Tena incontinence care pads, Tork feminine care products, Libero baby diapers, and Tempo toilet paper. Located in the southwest of India, the SCA plant is scheduled to go into operation in 2015.
Chairman of the board and CEO of SCA Jan Johansson said, “This investment will establish a solid platform for us and enable us to seize the favorable growth opportunities inherent in Indian hygiene products field, at the same time, the investment is also in line with SCA’s strategy of strengthening our position in emerging markets. Large population and low penetration of hygiene products in India are the foundation for our future growth. SCA’s target is to introduce hygiene products into the Indian market in the second half of 2013.”
Currently, as India’s logistics network is underdeveloped, international brand manufacturers are joining hands with local regional diaper manufacturers by commissioning these small plants OEMs to produce diaper products with the same quality and packaging appearance, to meet the fast growing market demand.
A transforming market
Regarded as a kind of “luxury” without reuse value in India, diapers are unaffordable for people in many regions. In addition, different from consumers in other diaper markets, Indian mothers believe that the use of diapers for a long time may damage their babies’ skin. However, with the changing socio-economic climate and shifting cultural patterns, more and more Indian mothers are beginning to accept baby diapers, which is helping to transform the market and bring it onto a new stage.
However, it’s rather hard to change Indian mothers’ mindset. They need to verify repeatedly the products their babies use to dissolve their concerns. Therefore, soft, breathable baby diapers may fit the Indian market demands well. For example, in order to help new mothers to recognize and accept the products, diapers produced in Kimberly-Clark’s Indian plant will carry the note “clinically tested and verified” on its packaging.
Sanitary napkin market: A long way to go
Discussion of menstrual health in public is a taboo in India, therefore, sanitary products still exist as kinds of mysterious objects unknown to most people. The market penetration of sanitary napkin in India is rather low.
The Indian sanitary napkin market is still in its infancy, with product recognition much lower than that of diapers, not to mention sanitary pads. Most Indian women living below the poverty line have no knowledge of these types of products and couldn’t afford them even if they did. At the same time, sanitary napkins are not available in most places in India, so for Indian women they are a luxury. There are only 2 to 3 leading brands, such as Sophie, Whisper and Kotex in the market. Only affluent women from the middle class can afford to buy them. Other regional sanitary napkin products produced locally are simple straight/wingless products. It will take more time for the sanitary pads market to develop and be recognized as valuable products.
As feminine hygiene products such as sanitary napkins available in the market are far beyond the affordability for some families, few girls have the chance to use sanitary napkins after they enter puberty. As an alternative, they mostly use fabrics and other objects during menstruation. According to “Times of India”, a latest survey in India suggests that 70% of Indian women can’t afford to buy sanitary napkins and more than 20% of adolescent girls drop out of school because of menstruation issues. The survey shows that only 12% out of 355 million women in the menstrual period use sanitary napkins, and the remaining 88% of women would choose rags or ash as substitute.
With the increasing attention India’s government’s is paying to the issue of women’s menstrual hygiene, and the growing awareness among Indian women about sanitary napkin products, the sanitary napkin market in the country will begin to take off gradually in the years to come.