This is nothing new. Countries like Brazil, Russia and China have been under the spotlight for more than a decade as companies sought growth either through building new sites or acquiring existing businesses. And there have been many success stories as consumers around the world benefit from the hygienic benefits of absorbent products.
It seems these efforts are continuing gangbusters as companies look for new unchartered territory. In recent months, investment activity in places ranging from Central America to Africa to Southeast Asia has been stronger than we have seen in years. Kimberly-Clark—even as it streamlines plants globally—is investing $40 million in production and supply at an existing site in Costa Rica. The company says these efforts will help it expand output of baby care and feminine hygiene products to countries throughout Central America, Panama, the Caribbean and Puerto Rico. This news came just months after the maker of Huggies diapers said it would invest in another developing country—KC announced plans to build a new factory in Nigeria featuring enhanced technology and capabilities in May.
Speaking of Africa, Chinese investors recently completed East Africa’s largest diaper factory in Kenya, representing an investment of $39 million. The new factory, constructed by Sunda, will make softcare diapers which have been exported from China to Kenya for 10 years. Sunda said that local production will allow it to make the diaper cheaply, which will mean lower prices and better affordability for the Kenyan consumer.
While affordability may be the key to winning over the Kenyan consumer, in other up and coming markets, notably China and other parts of Asia, sophistication seems to be the most important trait consumer value in in the diaper. Companies like Unicharm, Kimberly-Clark and Procter & Gamble are all applying their most sophisticated diaper technology into China and other parts of Asia (for more on China see page 39) to hopefully capture a piece of this growing market.
Considering the complexity of emerging markets, it is wise for companies to be exploring as many countries or regions as possible to prepare for challenges like political unrest, recession, trade issues and other unplanned factors that unexpectedly pop up to negatively impact sales.
As always, we appreciate your comments.