During the first quarter of 2015, diaper sales in Eastern Europe increased 55% with volume gains accounting for 25% of the increase and the remaining coming from pricing measures implemented late in the quarter. “Volumes might level out (in the second quarter) but the effects of pricing increases will continue into the next quarter,” CEO Tom Falk told analysts.
Meanwhile, Chinese diaper sales increased 35% and Brazilian sales increased 15% during the quarter. Growth has also been stellar in emerging markets for feminine hygiene, Huggies baby wipes and K-C’s adult incontinence products.
In North America, diaper sales continued to suffer but executives expect a relaunch of Huggies Snug and Dry diapers to lead to a recovery in this market. The premium diaper line now features improved performance, a stronger marketing message and better shelf positioning, Falk says. The new products began rolling out in March and should be available at 80% of K-C’s retail partners by the end of April.
Falk did not go into specifics on the product improvements but said he is bullish about the results. “We didn’t lose our share in one fell swoop and I am sure it won’t all come back but we have a better product on shelf and a stronger advertising message and I’m sure we are going see some nice results,” he says.
In January, during its fourth quarter earnings calls, K-C executives announced plans to focus more on marketing and innovation in its diaper business to better compete with Procter & Gamble’s Pampers and Luvs brands. At the time, K-C diaper volumes were off about 10%
Outside of the diaper business, K-C is also busy defending its place in the adult incontinence market. Within adult incontinence, the company has recently rolled out improvements to its Poise light incontinence pads and launched new briefs in its Depend adult incontinence brand. These efforts will better defend, K-C, the market leader in adult incontinence, against rival Procter & Gamble's return to the category late last year.
“We’ve lost less than our fair share—less than half a point in the quarter,” says Falk adding that higher growth levels, probably caused by promotional campaigns, have also helped this business.