Trends in the Baby Diaper Market

Release date:2020-04-17



Tara Olivo, Associate Editor



Despite high market penetration and stagnant growth for baby diapers in developed regions like the U.S. and Western Europe, developing regions, specifically Asia and Africa, are predicted to deliver strong growth opportunities for baby diaper manufacturers in the future.


According to figures from Euromonitor International, the value of the global baby diaper market in 2019 was $43.38 billion (real terms, 2019 fixed exchange rate), and it is expected to witness modest growth over the next five years, with a compound annual growth rate (CAGR) of 3.5% to reach an estimated $51.53 billion by 2024.


Regionally, the fastest growing markets are now found mainly in Asia and Africa, according to Svetlana Uduslivaia, head of Home & Tech Americas at Euromonitor. The CAGRs for the two most populated countries in the world, China and India, will be 7.4% and 14.8%, respectively, through 2024. Indonesia, Thailand and Vietnam are expected to be the fastest growing markets for baby diapers in Southeast Asia, with CAGRs of 11.8%, 5.9% and 8.4%, respectively, during the same time period. In Africa, Kenya and Nigeria are projected to see the fastest growth over the next five years, with CAGRs of 2.9% and 13.3%, respectively.


Meanwhile, with lower birth rates, more developed regions are expected to grow at a much slower rate.


“The disposable baby diaper market has been struggling in most of the mature markets, not only because people continue to use less diapers per day (a trend that our industry started with the 12 hour guarantee more than a decade ago), but also due to record low birth rate numbers,” says diaper industry consultant Carlos Richer, CEO at Richer Investment and Diaper Testing International. “In the United States, as an example, the birth rate in 2019 dropped for the fourth consecutive year in a row. Some people in our industry have predicted that sales in the U.S. will have to go up next year because women’s biological clocks will force them to have a baby, as they will be unable to delay this decision for any longer. I am not so sure this is true.”


While Richer agrees that there are a growing number of couples deciding to have their first baby later in life, there are also a larger number of couples deciding to have only one child, or to not have a child at all, with a preference to have a pet. “Unfortunately for this segment of our industry, it is easy to anticipate that 2020 will be another record low for birth rates,” he continues. “This is in part due to the likely reduction in the number of young immigrants coming into the U.S. In countries like Austria, the U.K. and Spain, the statistic about couples deciding never to have a baby is at a record high and continues to climb.”


Pricie Hanna, managing partner, Price Hanna Consultants, is also witnessing this trend. “Developing markets have really flattened out in growth,” she says. “They’re fully penetrated for the most part, and we need more babies. The birth rate in almost every country in the world is going down, and we have many countries now that are not replacing their own populations. That is hard to change.”


Most of the disposable diaper penetration opportunities for growth today are in Africa and rural Asia, she adds. In these markets, the biggest questions relate to affordability—whether there is steady economic growth where consumers feel that their standard of living can increase and they are optimistic, and whether they are living in a secure environment. “When there is stability and income growth, market penetration accelerates, but this progress is set back every time there are serious security or local warfare issues,” she explains.


A major positive influence in these regions has been access to the internet. “The internet is really making a difference in consumers becoming aware of products and understanding their benefit, and the global leaders are doing a great job communicating to consumers,” Hanna says. “Growth in developing markets is changing, because of the ability of consumers to become aware of the benefits and features of quality diapers. Consumers, even if they are low income, are making decisions about what they understand is the best for their baby, and how they will allocate the limited income that they have. Once they can try a high quality disposable diaper, they typically remain loyal purchasers as long as their income growth is secure.”


Richer sees baby diaper sales continuing to grow with double digit numbers in some emerging countries in Asia, with a “shining star in India.” Africa is also picking up steam. “We are seeing the start up of new baby diaper factories not only in the most developed regions of Northern and Southern Africa, but also in the Central less developed part of the continent. We are also seeing a healthy growth rate in the Middle East, Eastern Europe and some Latin American countries.”


Asian Influence

The influence of Asia in the baby diaper market cannot be underestimated. Global trends such as softer and more breathable materials, as well as the ultra-premium segment, began on the continent in the last decade.


In China, past concerns over product safety steered parents toward premium, foreign-made diapers in the country’s urban areas. These diapers were high-quality, ultra-soft and offer an improved fit, and most notably, “Made in Japan,” which prompted some Japanese manufacturers, like Unicharm, to expand capacity.


Huggies maker Kimberly-Clark has been seeing success in the premium diaper tier in China. During the company’s third quarter 2019 conference call, CEO Mike Hsu reported that in China, the company’s organic sales in its key personal care business were up mid-teens compared to a soft performance last year. Sales were up double digits in both diapers and femcare, and in diapers, net pricing was helped by reduced and more targeted promotional spending, he said. He mentioned specifically that innovations launched on premium Huggies were delivering strong growth and improving mix.


“We feel very positive about the innovation that we’ve been launching,” Hsu said. “The 5D core diaper in China is doing very, very well.”


Another growing segment originating in Asia is the pant style diaper, as more parents have been converting from tape style diapers to the more convenient underwear-like pant style.

Hanna notes that the baby pants trend is still much more significant in Asia than in other regions. “It was fascinating to watch Unicharm’s success in starting baby pants in Indonesia and India because they realized that in those hot climates, pants were convenient, and they were similar to the traditional baby clothing before disposables,” she says. “They launched with affordable pants and were very successful in both countries, so that went against the perception that baby pants had to be more expensive and belong primarily in sophisticated Western markets.”


In describing baby pants technology, Richer says that it’s clear that the old style pull-up baby pant chassis made in machine direction with elastic film—like Huggies Pull-Ups—has lost its global traction and has essentially lost the battle against the Asian style three-piece cross directional Spandex baby pant. “It is interesting that even K-C, who is the market leader for Pull-Ups in the U.S., has preferred the Asian style pant for all their new pant launches, like those pants recently launched in Mexico, and most of Asia (Malaysia, Philippines, India, South Korea and China). The traditional open diapers are almost gone in India, with more than 95% of market sales already replaced by baby pants, made in all sizes from newborn to jumbo.”


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