According to estimates from market research company Euromonitor, the India tissue paper and hygiene product market will grow significantly until 2020. During this time, the market size will increase from current 57.8 billion Rupee ($870 million) to 100 billion Rupee ($1.5 billion). Euromonitor points out that the strong demand mainly comes from the increasing income of countryside consumers and their pursuing of more comfortable and convenient lives.
The continuous improvement of literacy rates, the enhancement of consumers’ safety and sanitary consciousness, and extended lifespan, plus improvements in conditions in rural areas, have all created opportunities for expansion of the hygiene market. The Indian people want to improve their living standard and incomes. They have increased the percentage of working females and upgraded consumers’ consumption habits. These factors will help to fuel the development of disposable hygiene markets. The Indian disposable hygiene market is consumer dependent, quite similar to that of China, where people there also hope to use necessary products to improve their quality of life.
General Economic Conditions
India occupies 2.3% of the world’s land area, and English is the official language. Its popularization provides India with a big advantage in economic and trade cooperation with other countries. Among its population, 72% are literate, 21.8% live below the poverty line and 31% live in urban areas. Urbanization has progressed at 2.4% every year. In 2015-2016, the Indian middle class accounted for 20% of the population, but owned 49% of the cars, 21% of televisions, 53.2% of the computers, 52.9% of the air conditioners, and 45.7% of the credit cards in the country. By 2025, the proportion of the middle class is expected to rise to 37%.
India is gradually changing and moving toward a market economy. The government adopted some economic liberalization measures, such as the elimination of regulations and decentralization of power, privatization of state-owned enterprises, reduced limitations and loosened control over foreign investment. All these measures have boosted the development of the economy. In 2014 and 2015, its economy rebounded continuously, with an annual growth rate above 7%. From a long-term perspective, India’s economic growth is positive, because by 2030, its population will exceed China, making it the largest in the world. Also helping India’s growth is the fact that the percentage of young people is rising.
While the Indian economy is advancing in a good condition and with fast trend, the actual economic growth is dependent on government policies, i.e., the ways to solve a series of social problems, including how to build the necessary infrastructures, improve the industrial capacities, etc. These problems have plagued Indian government. However, the government has formulated a plan to make its manufacturing industry account for a greater percentage of the national GDP. In 2015, India’s GDP was about $2 trillion and the manufacturing industry only accounted for 16% of that figure. The government hopes to increase that percentage to 55%.
A lot of Indian consumers are changing their consumption habits, with more people willing to spend. In the next 20 years, India’s business environment will improve dramatically, with key focus on sectors that closely connect to people’s daily lives, including healthcare, food, education, housing, infrastructure construction, etc.
Retail Trade and E-commerce in India
India’s e-commerce business is increasing 30% every year. The retail trade is also growing at the same time. It is expected that by 2020 the retail revenue will increase at the annual rate of 12% and will double to $1 trillion.
Google has predicted that up to 2020, the Indian e-commerce market will amount to $120 million. Nitin Bawankule, the industrial director of Google India, further pointed out that in the next five years, as the percentage of female users grows from 30% to 40%, female purchasers will drive online purchasing significantly. This is another important factor to foster India’s future change.
As consumer consumption continues to rise in India, the mother and baby market will be another booming sector that may experience explosive growth rates. When this same demographic becomes wives and mothers, they will help increase e-commerce sales. According to a report, the India maternal and infant market will grow 17-18% to $20 billion. On-line and off-line retailers are very interested in this “big cake.” It is expected that the next retailing battle will be staged on this market. These factors will boost the growth of the Indian hygiene market.
For example, Amazon has increased its SKU of infant consumer goods (0-2 years old) to 160,000, including diapers. Saurabh Srivastava, the head of Fast Moving Consumer Goods, Amazon India, said the sales of infant consumer goods increased 300% last year. “Infant product is about to be one of the top five best sellers worldwide, and consumers of this category show the highest brand loyalty.”
Feminine sanitary products account for a significant proportion of the Indian disposable hygiene market. According to Euromonitor, the Indian feminine hygiene product market has reached 22.21 billion Rupee ($340 million) and is expected to reach 34.68 billion Rupee ($522 million) in 2020. Euromonitor pointed out that manufacturers should work along both lines—attract young consumers through online purchases while at the same time penetrating small towns and rural markets.
The upper class of Indian women are trying to find high quality hygiene products, however, in poor rural areas, many women still haven’t start to use sanitary napkins. In the past, Indian women used to use fabrics during their menstruation period. In fact, 70% of women use rags because of poverty and lack of knowledge.
Being aware of the problem, the government has started to take measures to promote sanitary products in poor areas. Today, sanitary napkins are increasingly getting popular among women. Of course, continuous education and marketing from big international brands has significantly contributed to this penetration.
According to data from BCH (Indian Nonwovens Industry Association), in 2014, the female population among 12-54 was 375 million, and the penetration rate of the sanitary napkins market was only 24%. In 2018, this figure is expected to grow to 42%. Currently, sanitary napkins with fluff pulp as core occupies most of the market share because of its lower price. Although the market for ultra-thin napkins is expected to increase.
What needs to be noted is that India has invested little in the research and development of sanitary napkins. Although upper class females hope to have higher quality products, there are no innovative products available. Today, 95% of India’s sanitary napkin market share goes to international companies like P&G and Johnson & Johnson.
In 2014, the population of Indian infants between 0-2 was 43.16 million, which means there is huge market potential for baby diapers. However, this market penetration is very low, only 7.6%. People in the countryside mainly use cloth diapers. People are concerned about disposable diapers since Indian society doesn’t recognize these kind of products. In addition, the cost for potty training and baby care is also quite low.
In 2014, high end hospitals in India started to provide diapers for infants. The sales of disposable diapers in retail also helped the market to grow. These efforts are expected to help the size of the Indian diaper market double by 2020, according to Euromonitor.
The rigid market demand is robust, and international companies including P&G, Unicharm and Kimberly-Clark still hold 92% of the Indian diaper market. In the past couple of years, the market share of Kimberly-Clark started to drop.
Based on their comprehensive analysis of baby diaper sales in India, relevant organizations pointed out that the market size will be 47 billion pieces per year, which is very promising.
Pull-up diapers account for 36% of the total sales of baby diapers. Mothers in India have given positive feedback on the ultra-thin pull-up diaper with an elastic waist from Unicharm. Sales of these products were strong, influencing other companies to follow Unicharm and launch similar products.
In 2016, the import volume of baby diapers in India started to reduce.
In 2014, the population older than 65 in India was 21 million. The usage of adult diapers in India is very low, and only accounts for 0.6% of the total hygiene market share; however, the demand of nursing pads started to increase.
Taking care of the elderly population is increasingly an acute social challenge. Although the adult diapers market in India started at a low development level, it has grown rapidly. The continuous construction of international hospital chains helped many diaper manufacturers to promote their brands across India. Today, 70% of adult diapers are sold through hospitals and their affiliated stores, which are welcomed by Indians. The majority of adult diapers are diapers, pads, and nursing pads. Indian senior centers are also starting to promote adult diapers.
Currently, there are no international companies producing adult diapers locally. However, international manufacturers like Unicharm, Procter & Gamble, and local manufacturers like Emami Group, Rohit Group, Surfactants Limited, Mangal Textile Mills (India) Pvt. Ltd., Nobel Hygiene Ltd., and Walmart all show great interest in the market.