Consolidation in the diaper market is nothing new. In the past few decades, the market—particularly in North America—has consolidated itself down to just a few players. For years, the market has been dominated by just two major companies—Kimberly-Clark and Procter & Gamble—and a handful of private label manufacturers. This has intensified competition in the market, driving down prices while raising the bar on innovation…until recently.
After years of getting thinner, more absorbent and simply more functional, diaper innovation has slowed down in recent years, probably because the product is about as good as it needs to be. This has created opportunities for new players—whether they are offering a branded or private label product.
And, it seems that European manufacturers are taking notice.
Ontex, which is based in Belgium, first entered the North American market in 2015 when it purchased Mexican diaper maker Mabesa and subsequently established an Americas division. Since then, Mabesa’s influence on the North American market has only grown. The maker behind Honest diapers, which offer higher end products for parents looking for value adds like printed designs or higher end ingredients, has certainly exerted its influence on the North American baby diaper market and it seems that the company is not finished yet.
Just last month, Ontex said it would acquire Hypermarcas, a Brazilian manufacturer of adult incontinence items and baby diapers. This business will be grouped with the former Mabesa business in the Americas division. Executives say that these acquisitions check a number of boxes when its comes to Ontex’s expansion strategy, most notably increasing its branded business and expanding its sales outside of Western Europe.
Meanwhile, Drylock Technologies, with its pulp-free technology, also has a subscription-based, high end diaper offering in the U.S., which are sold under the Parasol brand. Launched in mid-2016, Parasol was Drylock’s first entry into the U.S. diaper business, and it looks like the company remains bullish about the market. Last month the company announced it was purchasing National Presto’s diaper manufacturing assets in Eau Claire, WI and establishing a North America headquarters there.
It will be interesting to see how these two companies will impact diaper market trends in the U.S. and throughout North America, particularly in the wake of the Trump administration’s policies to increase tariffs and regulate trade between many of the U.S.’s longtime partners like Mexico—where a reported 25% of diapers made are exported to the U.S.
As always, we appreciate your comments.