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    Editorial

    Consolidation Continues In the Diaper Market

    ...

    07.05.11
    Last month, Associated Hygiene Products (AHP) announced it would purchase former rival in the private label baby diaper market, Arquest, Inc., creating (potentially) the world's largest maker of private label diapers with big boy customers like Wal-Mart and Babies R Us. The news came as no surprise to diaper industry watchdogs—it was rumored for months and executives from both companies hinted at it on several occasions.

    As the dust settles around this large-scale acquisition, most stakeholders in the disposable diaper market agree that it will mean good things for diapers in the long run. By consolidating two businesses, AHP will have more clout with retailers and be able to negotiate larger contracts with its suppliers. At the same time, shifts in supply and demand throughout the diaper supply chain brought on by the acquisition will open up opportunities for other major U.S. private label diaper makers like First Quality and Irving Products.

    These benefits will complement other positive market factors like the pricing increases already announced by the national brands—Procter & Gamble and Kimberly-Clark—which are set to go into effect this summer. Hopefully, these increases will be readily accepted and eventually replicated by private label and smaller players in diapers.

    On the nonwovens supply side, diaper manufacturers will have their pick of new materials to choose from in the next 18 months as new spunmelt lines pop up around the world in places as diverse as South Carolina, Indonesia, Peru and Egypt. Surely, nonwovens producers will be keen to help the diaper market continue its global expansion to help move all of this capacity quickly and efficiently.

    Speaking of global expansion, this week SCA announced it has bought a stake in Komili, Turkey's fourth largest diaper maker to help its expansion. In the past 12 months, SCA has made significant investment in Latin America, North America, Russia and Vietnam, and CEO Jan Johansson has no secret of the fact that global expansion is one of his top priorities going forward.

    While not as public, other diaper manufacturers have been just as aggressive in implementing global strategies in Asia, the Middle East, Eastern Europe and Latin America. To make up for slow growth rates in the already developed areas, these companies are banking on these regions for tomorrow's sales growth. To help them, their nonwovens suppliers are already ambitiously investing in literally hundreds of thousands of tons of new material that will offer lighter weight, more cost efficient materials. If these companies have their way, in the future, no babies —no matter where they live—will go without disposable diapers




    Karen McIntyre
    Editor
    karenb@rodpub.com
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