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    Features

    India Diaper Market

    In 2023, two in five babies aged zero to two years in the APAC region will be born in India—creating a huge potential consumer base

    India Diaper Market
    Feminine hygiene brands are focusing on the 88% of Indian women who do not currently use sanitary care products.
    03.05.20
    By Raymond Chimhandamba
    Handas Consulting (Diaper Market Specialist), Johannesburg, South Africa



    Cyber Media Research 2016 Report
    A 2016 presentation on the India diaper market by Cyber Media Research indicated India’s diaper penetration is at 3%, with 80-85% of the market dominated by four brands: Pampers, Huggies, Mamy Poko and Libero. Market size by value was estimated at $300 million. In 2013, Pampers had a 56% marketshare with Kimberly-Clark and Unicharm tied in second place at 18%.  By 2015, the picture was already beginning to change quite fast. In two years, Unicharm had stolen marketshare from both K-C and Pampers and had catapulted itself to second place with a 34% marketshare. By this time K-C’s market share had decreased to 17% and P&G was down to 47%—but still leading. Libero was the no. 4 brand. What drove Unicharm to the top was lower prices and higher margins on its newly introduced pants style diapers. 

    A few positive developments were also driving the market. The number of women in the workforce was increasing 5.6% per year. Purchasing power in India was generally growing. Customer aspirations were on the up and the price of diapers was coming down. The winning formula at that time was cost, comfort and convenience. If you met those three criteria, you had a good value proposition. On the demand side, a few drivers such as increased awareness and growing penetration in rural markets also played a part. 

    On the supply side, innovation and cost efficiencies brought by Unicharm certainly played a part. Digital trends, which allowed for next day deliveries were also a factor. There were also improvements on the supply infrastructure. More channels were being introduced and manufacturers covered more sales areas and increased their reach. In fact, according to a company spokesman, Unicharm increased its reach to about two million outlets.

    It is also important to remember that pants-style diapers were already available in India when Unicharm introduced their product. Both Pampers’ and Huggies’ pants diapers were priced higher so only affluent consumers could afford. This meant lower sales. So the key brands in the pants format as far back as 2016 were Unicharm, Huggies and Pampers. Key players in the tape format were Libero, Mamy Poko, Pampers and Huggies. In the eco-friendly space, the key brands were Himalaya, Eco-baby and Earth’s Best Organic. The private label market, meanwhile, was dominated by Mee Mee and Charlie Banana. Nobel Hygiene was also a significant player, even back then.

    I was very deliberate about the market history and I am grateful for the CMR presentation for availing it. Fast forward to 2019-2020 and player, Unicharm’s Mamy Poko, which was no. 3 in 2013 with 18% marketshare, has turned the market on its head becoming market leader with in some cases more than an 80% marketshare.

    The category has also shifted to pants format diapers which now represent more than 80% of diapers in the region. In terms of raw material trends, key focus areas for diaper manufacturers have been softness, absorbency and body hugging fit. CMR shares that the continuous challenge for nonwoven suppliers has been to deliver cost competitive fabrics with the specific functional performance and aesthetic properties that the manufacturer and consumers are demanding. As far back as 2016, indications were that there was a clear focus on achieving optimized absorbent cores with improved performance in fluid acquisition/distribution materials. Suppliers secured flexibility from diaper manufacturers to change raw material formulations to accomplish cost efficiencies while maintaining high performance standards. 

    Key influencers to the Indian consumer include family and friends, TV, print media in the form of parenting magazines, social media and websites. Greater convenience and lower costs have been driving diaper sales and the e-commerce platform has also been growing, led by Amazon, Firstcry, Flipkart and Snapdeal. E-commerce is a growing channel for premium and imported diaper products, catering to richer Indians, a trend that we have seen in China before. Companies with premium diaper offerings will achieve success even with only the e-commerce channels. Same day delivery will be a game changer for the Indian market. In the last few years we have also seen capacity expansions by all four market leaders—Unicharm, Essity, P&G and K-C. In fact by 2017, Unicharm was on its third factory in India, a $176 million investment that helped to boost its output capacity in the growing market by 50%.   

    Euromonitor 2019 Report
    According to the 2019 Euromonitor report, there are high potential signals and significant opportunities for growth in the Indian market. The report indicates that potential for nappies/diapers/pants in India is quite significant, with current value sales representing a mere 6% of the total level possible. This figure is double what CMR indicated for 2016, in less than five years. This presents significant opportunities for category penetration and growth.

    E-commerce in India is challenging the dominant brick and mortar retail, a trend that we saw mentioned in the CMR report of 2016. Store-based retailing remains the most preferred channel for consumers to purchase nappies/diapers/pants in India. Within the brick and mortar space, grocery retailers dominate, followed by health and beauty specialist retailers.

    The digital spotlight is on high-end consumers as we see more players introducing premium products. Although the primary focus of companies is to expand the consumer base, to capitalize on the massive population that the market offers and to drive category penetration, thereby driving product sales, upper-middle-income and high-income consumers provide opportunities for manufacturers to push premiumization. Premiumization of course comes with the advantage of higher margins, for which every business strives. Catering to niche and newfound demand through innovation presents significant possibilities for players to build their portfolios and increase their value sales. We have seen this trend in China, also a high population market that compares well to India.

    In terms of the competitive landscape, we have seen that Mitsui & Co has partnered with Japanese chemical and cosmetics company Kao Corporation to enter the nappies/diapers/pants category in India. According to Euromonitor, Kao’s Merries brand will launch its products in India to cater to the premium segment in the country.

    Other market developments are that Godrej Consumer Products has exited nappies/diapers/pants in India by selling its Snuggy brand to Nobel Hygiene India Ltd. The category has been a non-focus area for Godrej for a while, as it has switched to higher-margin, innovative products under core categories of personal wash, hair care and home insecticides. Godrej has increased investment in these more lucrative categories like beauty and hair in Africa, specifically in the countries Kenya and South Africa, where they have made several significant acquisitions to consolidate their position.

    What Sets the Indian Diaper Market Apart?
    Euromonitor estimates that India’s nappies/diapers/pants market will double and reach $1.7 billion in 2023. This growth will be driven in part by time-pressed, convenience-seeking parents looking for an alternative to traditional cloth nappies. In addition, discounts offered by the retailers will attract price-conscious Indian consumers. The internet, through websites and social media, also further facilitates sales as consumers become more aware of the products available in the market and how to use them.

    Favorable demographics are also driving further growth. According to Euromonitor, “In 2023, two in five babies aged zero to two years in the APAC region will be born in India – a huge potential target consumer base.”  With more mothers joining the workforce, responsibility and lack of time are forcing parents to expand the diaper usage from only night time to during the day. The increased usage drives increased sales, however, Indian consumers are known to be price sensitive. Though mindful of spending, they are more willing to spend on better products for their children—a trend that we have seen in Africa, where cash-constrained consumers show a willingness to spend more for a better quality product. 

    According to Euromonitor Lifestyle Survey 2017, about one in five (19%) consumers in India will pay more for children’s products that are convenient to use. Convenience is also a key factor that came up in CMR’s report of 2016.  Increased disposable income also plays a key role here. “As the disposable income of Indian consumers grows, consumer spending on nappies/diapers/pants is expected to grow at CAGR 15% (2018-23).” 

    The Economic Times of India pegged the 2018 Indian diaper market at 4.6 billion pieces or $800 million.

    Why are Pants Dominant in India?
    Compared to other APAC markets, disposable pants have a higher market share in India than nappies/diapers in total sales. In fact, pants have a mammoth share of 90% in the category. In Bangladesh, pants format share does not even register, in the Philippines, it is around 2%; in China just above 10% and in Indonesia just above 60%. The disproportionate share can be attributed to the convenience of use they offer in comparison to tape-style diapers. This is very much in line with my January report on pants diapers in South Africa. The convenience of a pants diaper is a key motivator for conversion to pants. Additionally, the unit price of tape-style and pants-style diapers are almost the same unlike in other countries where pants style diapers are premium products. Consumers usually upgrade to disposable pants after using tape-style diapers. This is also in line with trends that we have observed in Africa where mothers who are currently using cheap disposable diapers are likely to upgrade to better more expensive offerings compared to mothers who are using cloth diapers.  

    Mamy Poko Pants Triggered Growth in Pant Style Diapers
    Euromonitor says that Pampers (P&G) and Mamy Poko (Unicharm) continued to be the two dominant brands in terms of value sales in 2018. Over the years, the category grew due to improved availability of products courtesy to distribution channels, affordability and marketing efforts of the top players. According to Economic Times, ever since Unicharm launched in India in 2008 with its pants format diapers, they increased they have increased sales, enjoying double digit growth and in the process outpaced the market growth.

    Until 2012, brands like Pampers (P&G) and Huggies (Kimberly-Clark) had decent distribution but sales were limited. The market gained momentum with the introduction of Mamy Poko (Unicharm) in 2010, which launched disposable pants in India in a big way.

    The initial offerings of Mamy Poko were priced relatively lower than tape style diapers, which was a disruptive move since pants are generally viewed as a premium offering. With their marketing efforts, they were able to gain traction fairly quickly. The growing popularity of disposable pants, due to the price point and convenience of use as well as the resultant success of Unicharm, encouraged other players to invest in this sub-category with competitive offerings. This led to exponential growth in pants since 2014 in the diaper category.

    The low category penetration also played a role. As a result of the pants format’s exponential growth, before the tape style diapers became prominent, pants outpaced them. In the category, the pants are priced at par with tape-style diapers. In 2018, the share of nappies/diapers and disposable pants in the category was 11% and 89% respectively. Pants will drive the category growth and nappies/diapers will shrink.

    E-Commerce Grows
    The majority of consumers in smaller cities still prefer to buy smaller unit sizes from local stores. The small unit sizes trend is very much in line with other emerging markets like Africa. This is a popular trend with cash constrained consumers and we see this a lot in Africa. These consumers are less familiar with e-commerce platforms. Brick and mortar retail remains the most preferred channel for consumers to purchase nappies/diaper/pants.

    However, especially among urban consumers, internet retailing is gaining popularity. These consumers are more familiar with the product and brand that suits their needs and they prefer to buy bigger pack sizes online.

    To cater to this group of consumers, the e-commerce retailers like Amazon, Firstcry and Flipkart offer massive discounts on diaper packs with the option of convenient home delivery. To compete against the internet channel, the modern grocery retailers, particularly supermarkets and hypermarkets, have been offering discounts and run regular promotions to keep consumers engaged.

    Internet penetration is expected to rise from 39% in 2018 to 89% in 2023. This development, combined with the convenience offered by e-commerce platforms in terms of savings, discounts, and delivery, is expected to drive online retailing sales for diapers/pants and the growth is expected to more than double to contribute 25% of the overall sales by 2023. According to Nielsen, this event is already here as they argue that one in four Rupees spent on diapers is online and this is the highest of any consumer goods product in India. CMR had also predicted that same day delivery would be a game changer in the Indian digital retail space.

    Other Nonwovens Categories and Channels, and Growth by Regions
    According to an IMARC Group report, the rising spending capacity and surging population of working women is likely to lead to increased usage of incontinence products as these products become more readily available for India’s aging population.  Consumers with high disposable household incomes will be better positioned to spend on their aging parents. India offers this potential market in big numbers. This will obviously drive the overall consumption of nonwoven products. 

    According to APNews,  the baby diaper category in India was second only in size  to the baby food segment in 2017. “In terms of regions, Southern India bagged highest revenue share in 2017 followed by Western India. In addition, Southern India is forecast to exhibit higher growth than other regions in coming years owing to higher literacy rate and awareness in the region.”

    In terms of distribution channels, supermarket/hypermarket were the channels with the largest market revenue share while online retailing is picking up growth due to the increasing digitalization and internet connectivity in the country. In addition, the growing network distribution channels is also increasing the engagement of market players to involve pharmacy stores and exclusive baby products outlets which are likely to complement the category and baby care products market growth.

    Feminine Hygiene Market in India
    According to Gauri Singhal, a blogger on the Entrepreneur India website, India’s feminine hygiene market has been growing steadily. Players in this space should focus on capturing the 88% of women who are currently not using any sanitary care products. She says the five trends that are driving this category are: growth of the rural market, breaking the taboo, product innovation, emergence of more start-ups and funding and rapid category evolution.

    Growth of the Rural Market
    Rural consumers do not have access to feminine hygiene products due to a lack of availability, awareness or budget. But the landscape is changing. Bigger players in the feminine hygiene space like Johnson & Johnson and P&G are primarily focusing on pushing their products across this untapped market at the bottom of the pyramid while smaller players such as Emami and Pari are also entering this category with price points that are suitable for the market.

    In addition, the government and several new-age start-ups are going above and beyond to spread awareness through marketing campaigns, education drives and more. “NGOs, schools and cinema alike are doing their bit to spread awareness and education about feminine hygiene in rural areas,” she says.

    Breaking the Taboo
    Advertising campaigns and communication from market leaders have been “whispering about periods.” There is not enough open dialogue about menstruation, which is still being considered a taboo topic. Using blue dyes instead of red color in brand communication is an example. New-age feminine hygiene players are breaking this taboo. These players are using bold and quirky advertising which shuns the blue and embraces the red to encourage people to start conversations about periods. These brands are spreading awareness about new and innovative sanitary care products and letting women know that there are better alternatives out there for them.

    Product Innovation
    In developed markets, tampon’s marketshare can be as high as 60% compared to sanitary pads. In India, however, this number is below 1%. “Currently, Indian women have limited access to new and innovative products such as tampons in the feminine hygiene market. Leading players are focusing on capturing the 88% of women who are currently not using any sanitary care products while no innovation or fortification is being carried out for the 12% of the population that has been using the same old methods of sanitary care for years.”

    Several innovative start-ups are now bringing international top quality products such as digital viscose tampons, panty liners and intimate hygiene washes to the Indian market at prices that are conveniently affordable for all demographics as a way to combat this problem. In addition, indigenous companies are coming up with innovative pain relief methods for period pain. Herbal pain-relief patches are becoming popular in India—a market that is growing globally too. Innovation and its acceptance will drive the trend in the days to come.

    Emergence of More Start-ups and Funding
    The feminine hygiene space is attracting the interest from several leading VCs and investors, who are watching newer innovations that are revolutionizing the market. Prominent investors such as Kae Capital, Sixth Sense Ventures and Matrix partners have invested in leading start-ups in the category. Currently, the feminine hygiene space in India is one of the most under-penetrated markets in the consumer products segment. The market is dominated by a few big players and as a result, consumers have restricted options regarding products and price. However, with rapid urbanization, increasing disposable incomes and the growing number of women joining the workforce, a better foundation is being laid for affordable and accessible feminine hygiene products across demographics.

    New start-ups are working towards new innovations while spreading awareness about feminine hygiene in Tier 2, 3 and 4 cities. Encouraged by the investor funding that the category has been receiving, these start-ups will drive growth of the category in the years to come. 

    Rapid Category Evolution
    With growing awareness and better disposable incomes of women, the Indian consumer market witnessed an increased demand for premium and innovative baby care products. We are seeing innovative yet affordable brands coming to the market. Similar trends can be observed in the feminine hygiene space. Newer players, established brands, mainstream cinema, government initiatives and leading investors are now focusing on the feminine hygiene category.  This is likely to grow the category significantly in the years to come.

    New players in the feminine hygiene market are making great efforts to spread awareness about better products that offer more comfort and convenience. They aim to shatter myths and help people switch to more innovative products. Through these market dynamitcs, it is likely that further growth will be championed by ground-breaking start-ups that are focused on improving the quality of sanitary care in India and helping all women to lead their best, most comfortable lives, even when they are experiencing their period.

    In conclusion, when talking to some of the players in the AHP value chain, they say they have not enjoyed the growth of India’s nonwovens market as much as much as the AHP manufacturers.  The promise of the Indian nonwovens market yet impacted them, but with the market growth potential as well as  other encouraging trends, growth will certainly spread to all corners of the value chain in due course. It is just a matter of time before India becomes a market that will attract the interest of the AHP players for a long time to come.
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