The disposable baby diaper market in Brazil.
The market for disposable baby diapers is increasing rapidly in Brazil. In 1990, 170 million disposable baby diaper units were produced, with Johnson & Johnson holding almost an 80% share. Due to the recession, the 1991 and 1992 markets grew only slightly, reaching 200 million units. In 1993, 400 million units were produced and 700 million units were reached in 1994. Figure 1 shows that the market was divided mainly by Proctor & Gamble and Kenko do Brasil (from Brasfanta Group), knocking Johnson & Johnson from its previous position.
On the investments side, the second leading company in the market, Kenko do Brasil, manufacturer of "Monica" and "Tippy," held a market share of 28% in 1994. The company, which will duplicate its units in Eldorado City-Rio Grande do Sul State, invested approximately $40 million in the last two years and hopes, with continued investments, to reach 500 million units per year. Kenko do Brasil's 1994 sales reached $65 million and are expected to increase 35% in 1995.
Procter & Gamble - the leader in the market with its top selling "Pampers" - will invest approximately $100 million to build a new production facility in Louveira City-Sao Paulo state. Between May 1993 and January 1995, P&G jumped from 12% to 36%, achieving market leadership [ILLUSTRATION FOR FIGURE 2 OMITTED]. This strengthened position was a result of P&G's introduction of "Pampers Uni," one simplified style for both boys and girls, which was 50% less expensive than the traditional "Pampers Phases," developed in the U.S. and initially sold in Brazil. The success of Pampers Uni stemmed from P&G's move to manufacture the diaper in other countries such as Mexico, Formosa and the Philippines, exporting its Brazilian know-how to produce a single, low-cost product.
J&J is a company that was, in good faith, twice injured. First, the Brazilian economy was closed and J&J didn't have access to modern and productive equipment. Second, in 1991, the market was suddenly opened and filled with the lower priced Argentinean diapers. These factors ultimately left J&J with a market share of 21% in 1994.
This tremendous growth in the consumption of disposable diapers is due to the competitive market that has brought prices lower and lower in the last year. Since 1988 - when the market was led by J&J and a diaper had a cost of $1 - the price has fallen tremendously, so that today the same product costs $0.30 per unit. Another reason for this market's strong growth, according to the manufacturers, is improved product quality. Six years ago, diapers were produced with cellulose for internal padding, rayon viscose as cover-stock and they featured little more than one hour of durability. Today the use of gel and other raw materials has increased product durability to more than 12 hours.
Imported diapers - which had a market share of 3% in 1993 and reached 5% in 1994 - are coming from the U.S. and France. Pom Pom, which had a significant share in Sao Paulo City, lost its place in the Brazilian market and in 1993 appeared together in the "other" category.
Finally, in terms of the future of the Brazilian baby diaper market, sales should reach 1.4 billion units in 1995, with sales of approximately $360 million.