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    Features

    Trends and Developments in the Baby Diaper Market

    Diaper makers are implementing sophisticated marketing programs and aggressive expansion strategies.

    Trends and Developments in the Baby Diaper Market
    Trends and Developments in the Baby Diaper Market
    Pricie Hanna, Contributing Writer01.06.14
    During the last year, the leading competitors in the global baby market have pursued both sophisticated marketing programs and aggressive business expansion strategies, which have had major impacts on their suppliers’ businesses.

    Neuromarketing in the baby diaper market

    Marketing and advertising executives continue to fine-tune their messages to effectively reach and retain buyers’ attention and loyalty for consumer products, especially in rapid turnover categories such as baby diapers. For example, in the U.S. market the leading brands’ advertising for newborn and infant diapers emphasize the connection, Softness = Love. As babies grow, the message focus for larger size diapers is typically, Absorbency = Sleep, both for the baby and parents. For active, older babies, advertising highlights the security and comfort provided by the stretch features of diapers expressed as, Flexibility and Snug Fit = Play.

    In the U.S. market, Procter & Gamble’s “Love, Sleep & Play” baby photo campaign on the Pampers Facebook page reinforces these claims for parents so that they will be associated with Procter & Gamble’s diapers. Variations on these messages are seen in the advertising for Procter & Gamble’s Pampers Swaddlers diapers, such as, “Wrap your newborn in comfort and protection so all she feels is LOVE”; “Swaddle your baby in our softest diaper”; and “Pampers softest diaper ever wraps your baby in comfort and protection”. The advertising for Pampers Baby Dry emphasizes “up to 12 hours of Overnight Protection” because a “good night sleep means a happy morning for you and your baby.” Procter & Gamble currently describes their Pampers Cruisers diapers as “Pampers best dryness and fit” for a “little one on the go”. The company explains that in these premium diapers “less bulk than Pampers Baby Dry means that babies can play freely with a close fit to their bottoms”. Procter & Gamble’s website for Luvs diapers claims that “new Luvs with Nightlock offers our largest absorbency area ever to help lock leaks away overnight”.

    Kimberly-Clark’s U.S. advertising messages show a similar pattern. All of the company’s diapers promote the “trusted leakage protection of the Leak Lock System” with “absorbent layers to help pull in wetness and lock it away”; “leak guards to help keep wetness in”; and “grip tabs and a SnugFit waistband for a secure fit”. Kimberly-Clark’s descriptions of their Huggies Little Snugglers infant diapers include, “softness inside and out, with a breathable, comfy outer cover and quilted, flexible inner pad”. Their premium Huggies Little Movers diapers are “shaped for fit and flexibility” with “a stretchy SnugFit waistband to help our diapers stay in place like no other diapers”; and “Unique contoured shape provides a comfortable fit and stays in place as babies move and play”. Kimberly-Clark’s Huggies Snug & Dry diapers “have SureFit design for up to 12 hours of leakage protection”; “SnugFit waistband for all-around fit”; “now closer-to-body fit to move with baby’s twists and turns”; and “now softer outer cover”.

    Walmart’s store brand diaper, Parent’s Choice, focuses on three features on their packaging: “ultra absorbent core”; “snug & comfy fit”; and “cottony soft outer cover”.  Target’s store brand diaper, up & up, promotes “stretchable sides for excellent fit”; “thin, soft cloth-like comfort”; “hypoallergenic inner liner”; and “snug & cozy”.

    Diaper performance and material trends

    As is readily observed in these advertising messages, leading diapers are prioritizing the softness, absorbency/leakage protection and body-hugging fit performance of their diapers.

    Nonwoven suppliers continue to be challenged to deliver cost competitive fabrics with the specific functional performance and aesthetic properties that are required for each type of nonwoven component in state-of-the-art diapers. Ultra-soft and cushioning nonwovens with distinctive patterns are preferred for topsheet and backsheet components. Soft and effective fluid barrier nonwovens are required for leg cuffs. Higher fluid transport performance, resiliency through multiple wettings and soft, cushioning aesthetics are needed for acquisition/distribution sublayers. Low cost spunmelt nonwovens with superabsorbent containment properties are needed for lightweight core wrap. Soft and extensible nonwovens for elastic laminates are required for the stretch ear fasteners, side panels and waistbands that provide the body-hugging fit performance of diapers and diaper pants. In premium diapers, there is a global trend towards the use of bicomponent spunbonded or carded air-through bonded with bicomponent fiber to achieve ultra-softness combined with functional performance in lofty or apertured topsheets, higher performance carded acquisition/distribution layers and quilted cloth-like backsheet.

    Recent and expected expansions of global superabsorbent capacity provide diaper producers with opportunities to increase the superabsorbent compositions of diaper cores after a period of constrained availability of superabsorbent during the last quarter of 2012 and the first half of 2013. Consumers now expect good quality diapers to provide leakage protection for close to 12 hours. Optimized absorbent cores with improved performance in fluid acquisition/distribution materials are clear priorities for leading diaper manufacturers.

    Elastic fabrics are in their third generation of material and value optimization for diapers. Gentle stretch performance must endure at body temperatures for up to 12 hours to provide reliable body-hugging performance. This level of performance is crucial to leakage protection and comfort. The soft, cushioning aesthetics of the elastic laminate components also contribute significantly to consumers’ impressions of the quality levels of their diapers.

    Risk reduction in the supply chain

    During the last year, diaper producers have increased their efforts to work with their key suppliers to analyze and develop strategies to reduce supply chain risk of material shortages or price volatility from disruptions caused by industrial accidents, natural disasters and shortages due to infrastructure supply/demand changes in upstream materials.

    Diaper manufacturers are striving to reduce their dependency on sole source suppliers and supplier plants. Major diaper producers have annual or multi-year supplier contracts with price stabilization provisions for their key raw materials. The volume of spot market purchases of raw materials for diapers have reduced significantly, as only small competitors in emerging markets source their major materials without annual or multi-year contracts.

    The leading diaper producers have also given some of their major suppliers more flexibility to change raw material formulations to achieve lower costs and still meet performance specifications. This trend is particularly apparent in hot melt adhesives and elastic film grades where suppliers have demonstrated their value as experienced formulators capable of responsibly optimizing their raw material compositions to achieve the best values for their customers in response to current or anticipated supply chain shortages and/or price spikes.

    Other diaper market trends

    In mature markets, especially in the U.S., consumers have demanded large size diapers. Procter & Gamble’s Pampers Cruisers diapers are available in a size range up to size 7 for babies up to 41 pounds (over 19 kg). For Pampers Swaddlers, the diaper originally designed for newborns and infant babies, Procter & Gamble added sizes 4 and 5 this year to respond to consumers who want to continue using their “softest diaper ever” with the apertured bicomponent spunbonded liner.

    In November 2013, China’s government modified their one-child policy, which was established in 1979 to stop population growth. The policy change will allow couples, which have one parent with no sibling, to have a second child. This amendment is estimated to impact about 5.8% of China’s total population.

    In Asia, the popularity of diaper pants that started in Japan has extended to emerging markets. Unicharm’s development of the economy pants diaper market in Indonesia, China and India has been very successful.

    Hygiene companies build capacity and market position in emerging markets

    The global hygiene leaders continue to add capacity in many emerging market countries. The seven markets of China, India, Indonesia, Malaysia, Brazil, Egypt and Turkey are collectively projected to account for 58% of the global baby diaper and pant volume growth between 2013 and 2018. The capacity being installed in these countries is sized to supply both the local and surrounding regional markets. About 95% of the forecast diaper and pant volume growth in the next five years is expected to come from emerging and undeveloped market regions, excluding the fully penetrated market regions of the U.S. and Canada, Western Europe and Japan.

    In the past year, the following examples of major diaper capacity expansions in the higher growth potential markets are notable.

    In China, Procter & Gamble started diaper production at their new plant in Luogang, Guangzhou, China, which is a multi-category manufacturing plant where the company is making a $1 billion investment by 2015. Kimberly-Clark opened a new diaper plant to produce Huggies diapers and Huggies Pull-Ups pants in Nanjing, China in early 2013. During the first half of 2013, the company’s sales in China grew 42%. Unicharm is constructing a fifth plant in Yangzhou to supply northern China. Kao started diaper production at its new Hefei hygiene plant in Anhui Province, China in January 2013. Daio Paper, based in Japan, is constructing a new diaper plant in Nantong City, Jiangsu Province, China, which is scheduled to start-up in April 2014. Lastly, Pigeon Corporation of Japan recently started baby diaper production in a new factory in Changzhou, China.

    In India, Procter & Gamble Home Products began operations in late 2013 at a large plant at Kothur Mandal in the Mahbubnagar district of Hyderabad in the southern Indian state of Andhra Pradesh built to produce diapers as well as fabric, home care and oral care products. Unicharm is focusing on developing the market for diaper pants and is building a second plant in India while SCA announced plans to establish a hygiene manufacturing plant in India by 2015.

    In Indonesia, Procter & Gamble Home Products Indonesia started up a $100 million diaper plant in Karawang-West Java, Indonesia in December 2013.  The company recently announced plans for a second plant in this location. Unicharm is constructing a third plant in Surabaya’s eastern area to supplement the capacity of their existing facilities in Karawang, which is in the western part of Indonesia. At the end of 2013, Kao started up a second sanitary napkin and baby diaper plant in Karawang, east of Jakarta.  The company also announced plans to construct a new diaper plant in Java, Indonesia.

    In Malaysia, DSG International (Thailand) PLC recently started up a new diaper plant, warehouse and office building in Selangor, Malaysia. This plant replaces an older three-diaper line plant in Sungai Penaga Industrial Park. The new plant is designed to triple the capacity of DSG’s old plant.

    In Brazil, Kimberly-Clark started up a new plant and distribution center in Camaçari, Salvador state in northeast Brazil to convert diapers, feminine hygiene pads and tissue paper in June 2013. In July 2013, Unicharm opened a subsidiary in Brazil to prepare for production of baby diapers.

    In Egypt Procter & Gamble and Unicharm both began production at new diaper plants in Egypt during 2011, while in Turkey Ontex invested in a new diaper manufacturing facility in Istanbul to produce their Canbebe brand diapers.

    Supplier expansions in emerging markets

    Leading hygiene product manufacturers encourage their major raw material suppliers to invest in material production facilities close to the locations of their new diaper capacity in emerging markets whenever feasible. The global leaders strive to cultivate multi-regional relationships with their primary suppliers to ensure that consistent quality materials that meet the specifications required for their global brands are available. These opportunities enable suppliers to gain long-term incumbency positions with high volumes that allow optimized production and generate economies of scale. Suppliers do, however, risk major delays in receiving high volume orders if their hygiene manufacturer customer’s start-ups are delayed or product launches are slow to reach planned sales volume levels. Also, early entry into some emerging markets may expose suppliers to country risk from lack of security, political crises and economic reversals.

    Here are some examples of suppliers following hygiene leaders’ investments in several high potential, emerging markets.

    In China, state-of-the-art spunbonded and spunmelt nonwoven capacity has been installed recently for hygiene customers by Mitsui in Tianjin, PGI in Suzhou, Avgol in Hubei, Toray Polytech in Nantong, CHTC in Jiahua,  Jofo in Weifang and First Quality in Wuxi. PGI and the Rengo Group of Japan are investing in various types of carded nonwoven capacity for hygiene components. ES Fibervisions recently started up a bicomponent fiber line in Suzhou, China to provide fiber for carded through air bonded nonwovens and multi-bonded airlaid nonwovens used in hygiene products.

    In mid-2013, Pegas of the Czech Republic completed the startup of a 20,000 ton spunmelt line in the industrial zone of the 6th of October City, Egypt to supply Procter & Gamble’s new diaper plant there. The production was interrupted for two weeks in mid-August by a plant shutdown due to the uncertain security situation in the area at that time. The operations resumed in the first week of September.

    Gulsan of Turkey is installing a 20,000-ton spunmelt line in Cairo, Egypt to supply the hygiene leaders in that region. The startup of this line is currently planned for September 2014.

    In 2012, Bostik built a major hot melt adhesive plant in Cairo, which will be its base for supplies to hygiene customers in the Middle East, North Africa and Turkey.

    RKW started production of hygiene film in November 2011 at a plant located close to Procter & Gamble’s Egyptian diaper manufacturing plant. RKW is a major film and nonwoven supplier to Procter & Gamble in Europe.

    Toray Polytech recently started up a 20,000-ton spunmelt line in Tangerang to supply the growing demand from hygiene leaders in Indonesia.

    Fibertex is installing a fourth spunmelt line at its plant in Nilai, Malaysia with plans to begin production on that new line by the end of 2013.

    Avgol has announced plans to install a second spunmelt line at their Uzlovaya plant in the Tula region, south of Moscow. Commercial production from this 18,000-ton line is expected in 2015.

    In the second quarter of 2013, Weyerhaeuser opened its specialty cellulose processing plant in Gdansk, Poland to produce cross-linked curly fiber for Procter & Gamble’s diaper acquisition and distribution layer.

    Compania Providencia began production on a second spunmelt line in Pouso Alegre, Minas Gerais state, Brazil in June 2012.

    BASF is constructing an acrylics and superabsorbent facility at Camaçari, which is well positioned to supply Kimberly-Clark’s new diaper plant in Camaçari.

    These expansions have put large-scale, world-class capacity in place to enable rapid market penetration of the undeveloped diaper markets. The regional manufacturing hubs in the emerging markets, that are established by the global diaper leaders and supported by local material production of their leading global suppliers, will be the growth and profit generators for the hygiene industry in the future.

    About the author
    Pricie Hanna is managing partner of Price Hanna Consultants, a management consulting firm which specializes in nonwoven and hygiene absorbent products, key raw materials and related fields.
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