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The baby diaper market: the gathering storm.


The Gathering Storm

the changing color of the worldwide baby diaper market has converters either feeling blue or in the pink; with new product introductions picking up in late 1989 and with many more promised for early 1990, the industry is dealing with the challenges of disposability and very tight competition

Last year at this time the baby diaper and adult incontinence fields were about to embark on the latest of their massive product modifications.

As I wrote my last look at the market as 1988 came to a close, the gender specific product was attracting everybody's attention, but there had not been enough market activity to know whether the product was really acceptable to the mothers or if it was merely media "hype."

At that time, Procter & Gamble, Cincinnati, OH, was leading this segment with its boy/girl "Luvs" (available only in pink and blue) and by the middle of 1989 Luvs had grabbed a 20.6% share of the market. "Pampers," which is available only in white, had fallen to 26.2%. Most obervers believed that the interest in the gender specific Luvs was the result of P&G's tremendous advertising and promotion activity, not because mothers preferred the product.

Early in 1989, Pope & Talbot, Portland, OR, which had acquired the Georgia Pacific disposable diaper business (previously Riegel Corp.), introduced its "Teddy Boy" and "Teddy Girl" gender specific products with an absorbent core similar to that found in Luvs. Thus there was one private label manufacturer and one branded product manufacturer offering the gender specific products in the U.S.

Then, in mid-year, Kimberly-Clark, Dallas, TX, which had stated earlier that it was not going to enter the gender specific race, brought the "Huggies For Him" and "Huggies For Her" product into the market. At year's end, the product was available in only six selective regions of the U.S.; in three of them the medium and large size are sold alongside the small size, white unisex Huggies.

In three other areas, K-C is selling only the gender specific Huggies in all three sizes.

The K-C products also have a customized absorbent core with the superabsorbent material positioned in the front for boys and the center for girls. This is not difficult for K-C to do, as substantially all of its diaper-making machines have a drum-type former.

The two Curt Joa machines used by Pope & Talbot to make the Teddy diapers also have a drum forming apparatus that permits making a contoured absorbent core similar to Luvs.

Other manufacturers are already moving to bring gender specific products on the market, some merely changing the color of the plastic backing sheet without changing the absorbent characteristic of the core, some adding color to the end dams or the elastic waistband portion and some adding different colors to the coverstock material.

The problem is not in the manufacturing, but in the selling. The duplication of the two products means that the storekeeper and distributor are faced with increased space requirements, a situation that is not exactly pleasant for a business notoriously tight on space.

In Europe the gender specific product appeared with P&G offering boy/girl Pampers in Italy, France, Austria, Sweden and England. In some cases the product has a fully colored pink or blue backsheet and in other cases it is offered with the gender identification appearing only at the waistband area with colored leakage control barriers or the tape-tab landing stri:

In Germany, P&G sells the gender specific product under the Luvs trademark. With almost 50% of the German market already buying Pampers, P&G positioned this new product against the "other" brands and the private label sector.

Going Back To Basics?

The "Simply Pampers," which flashed into and out of the U.S. market for a few months, was only a test of a brand name rather than a new product. The diaper was the old Thin Regular Absorbency Pampers (TRAP). Simply Pampers is no longer on store shelves, but the orange and white striped boxes contain the TRAP product, which is thinner than the thick product and thicker than the thin product. In 1989 it had 1.4% of the market, an increase of 48% during the preceding 52 weeks.

Both P&G and K-C have been watching the growing market share of private label products. These do not have all the improvements of the technically-advanced Pampers, Luvs or Huggies. We will do well to watch the back to basics concept now that K-C is supplying a scaled-down version of Huggies under private label names to Giant Food, Shoppers' Drug and People's Drug Stores.

This marketing concept will probably not result in any lower market share for K-C's products, but may very well erode the gains that the private label products had made during the last 12 months.

In early August, the Wall Street Journal reported that P&G was planning a new Pampers with an expensive advertising campaign to appear sometime before the end of 1989.

The market share of the ultra thin "Ultra Pampers Plus" dropped 6.9%, an indication that mothers may be intrigued by the concept of a very thin product, but psychologically they feel that it doesn't really provide the comfort and protection a baby should have. They want the good absorbency provided by diapers using superabsorbent, yet with sufficient bulk to give the appearance and feel of a "good" diaper.

As these changes were taking place, the products were also appearing in compressed packaging, a concept that was started by P&G in Europe, which extended it to Scandinavia and Ireland and then to the U.S. This should be somewhat of an advantage to the storekeeper, because it tends to reduce the linear shelf space required to store the products, and to the mother, because it is more easily carried. Fameccanica, Sambuceto, Italy, has announced the availability of its fully automated system that compresses a stack of diapers into a small, square, compact bag.

The thinnest of the diapers (not including those being offered in Japan) were the highly-compressed ultra thin Pampers, which P&G offered in Berlin. The plastic bag was so tightly packed after the diapers were inserted that the package became almost brick-like. The package literally exploded when the plastic wrapping was opened.

K-C Leads U.S. Modifications

During the year, there have been three significant modifications to the diaper itself, all led in the U.S. by K-C, even though some of the concepts had earlier been tested by Unicharm and P&G in Japan and by Colgate in Europe.

*The first was the multi-ply, stay-dry transport layer coverstock that provides a "spacing" member between the body-contacting surface and the fluid-holding absorbent core. This design may be accomplished by thicker coverstock instead of a multi-ply assembly, but in any event will be of great interest to the producers of nonwoven web material.

*The foamed elastic waistband (a feature previously seen on "Tendresse" in France and "Ultra Moony" in Japan) was also introduced this year. Also in late 1988, Weyerhaeuser, in two page full color advertisements, announced that such a design would be found on its private label product; this did not appear on the market until a year later. K-C commercialized Huggies with a soft waistband with some of its melt blown polymers rather than a foamed urethane.

*The latest design struggle between the two giants--the upstanding cuffs--started when P&G introduced Pampers with this feature into the Seattle, WA area. These are sometimes called "leakage control shields." The highly sophisticated product has two parallel dams held up and away from the surface of the pad by an elastic catenary string (similar to the construction of a suspension bridge) to provide pockets between the side edges of the core and the sides of the dams. A similar but different construction had been seen for more than a year in the Ultra Moony product in Japan and P&G had counteracted the Unicharm activity with its Japanese Pampers with the upstanding cuffs.

On April 4, 1989, shortly after P&G put the Japanese Pampers version onto the shelves in Seattle, K-C brought a lawsuit in Federal Court alleging infringement of its Enloe U.S. Patent 4,704,116. K-C then immediately introduced in California Huggies with the leakage-control shield. It soon appeared in Denver and, by the middle of 1989, in the Midwest.

P&G's defense in the lawsuit is that the P&G diapers are made according to P&G's Lawson Patent No. 4,695,278 and do not infringe the Enloe patent, which it also claims is invalid.

This construction caught the attention of the nonwovens manufacturers, who visualized an increase of as much as 30% in coverstock consumption, and also the machinery manufacturers who could see the growing need for additional add-ons to the hundreds of machines. However, patents relating to this new feature continue to spew from the Patent Office like rabbits out of a hutch and this will be another situation where competitors will watch anxiously while the fight between the leaders takes place to determine the novelty and validity of such a feature.

Additional excitement was created when K-C introduced its "Pull Ups" training pants for children in the three to four year age group. This product is of great interest because of the large potential market extending beyond the usual baby diaper population.

On The Dark Side

While all of this excitement was going on with regard to the external mechanical considerations, the diaper world was sent into a turmoil by the dioxin scare in Sweden and the mad rush to put chlorine-free pulp into the diapers.

In Sweden, the supply of chemi-thermo-mechanical pulp (CTMP) in roll form was soon sold out to the Swedish diaper manufacturers and everbody rushed to get the baled version or a type of pulp that was bleached by peroxide. Fiber Converting Machine was swamped with inquiries about its bale handling and fiber recovery system. The environmentalists immediately took up the hue and cry and it wasn't long before practically every diaper maker had a product emphasizing biodegradability and "friendliness to the environment."

Dafoe & Dafoe quickly introduced environmentally friendly diapers. Fifty percent of the Dafoe company is owned by Tembec Pulp Co. in Canada, which is a major producer of CTMP in Canada allowing Dafoe & Dafoe to be the first to come on the market in North America with a dioxin-free pulp in its diaper. Other pulp producers such as Cascades now supply some of the requirements.

Concurrent with this activity, the biodegradable concern rose to new heights and, although every disposable diaper in the world is at least 80% biodegradable by weight of its fluff content, the rush was on to increase that percentage.

Several suppliers have developed a plastic sheet containing starch to entice natural organisms to eat the plastic backsheet; even the bags in which the diapers are sold are now being touted as being made of biodegradable film by some manufacturers.

The "Tender Care" diaper of Rocky Mountain Medical made a leap upward in the race by switching its coverstock to adhesively bonded rayon and then publicizing the product as being 97% biodegradable (with only the tape tabs, elastic bands and hot melt adhesives as the non-biodegradable portions).

The press and television media immediately picked up the subject and hardly a day goes by when there isn't another article regarding the disposability and biodegradability problems with landfill sites and reclaimed products.

In mid-1989 P&G announced a three-part program to investigate the matter. One group in St. Cloud, MN collects soiled baby diapers to be macerated and then used as mulch or compost as an additive to the soil. A second group in Seattle, WA collects soiled diapers, treating them to create new plastic materials to be turned into park benches and highway control guidance members. The third program is a study by a professor at the University of Wisconsin who will spend the next five years systematically digging up landfill sites to see how much biodegrading actually takes place.

This will be an interesting subject to watch, since many scientists are opposed to biodegradability in a landfill site and many marketers now require the diaper manufacturer to prove that the product is in fact environmentally effective, not merely state it on the package.

Successful Startups

All of this activity, increased machine costs, public concern, developmental necessities and legal gymnastics has not deterred some newcomers from entering the market and it is clear that a carefully planned business such as Randy Schaaf has started at UltraCare Products, Marion, OH, can produce economic success (see feature article on UltraCare elsewhere in this issue). Within two months after the startup of its machinery in late 1988, the operation was running in the black and, by the end of the year, plans were underway to double the production of its "Cozies" line.

Similarly, in Houston, TX, Veragon has successfully brought its "Drypers" product to the marketplace and it, too, is expanding with new machines.

A success story is also seen in the activities of Associated Hygienic Products, Norcross, GA, which has concentrated on basics, cutting back operating costs and marketing expenditures so as to take substantial market share from the leaders in limited regional areas. Its share has grown 43% in one year from .7% to 1.0%. The concept of carefully controlled production with an advertising program budget scaled back to a manageable size for regional distribution seems to be the measure of success.

In mid-1989, Nicholas Tsakrios announced his plans to start a company in the Miami FL area, limiting his market to the state of Florida. In Placentia, CA, Robert Chickering started selling "Bunnies" made for his company, American Enviro Products, by Pope & Talbot and Whitestone Products. By year end, sales had been expanded nationally.

It must also be noted that the mothers now recognize most private label products as the equivalent in protection and performance to the branded products. K-C seems to have confirmed this by offering its modified Huggies as "Snuggems Ultra" controlled label and by the private label brands it supplies to chain stores.

The other side of this coin is the failure of Whitestone, Piscataway, NJ, to turn a profit with its diaper operation and the sale by the parent company, Ipco, of the Whitestone operations to a foreign investor, Mr. Lababedi, who set up a company called RLG, run by John Christman and Dan Armstrong, who were formerly with Paper Pak.

The activity of Weyerhaeuser during the year seemed to switch from potential sale of the diaper business on one hand to renewed activity at the Bowling Green, KY factory on the other, for the introduction in 1990 of a new diaper using assistance from Unicharm and also some of the innovative compressed composite technology that Weyerhaeuser purchased from Johnson & Johnson, New Brunswick, NJ.

Everybody was watching the development at Celatose in France, particularly with regard to the sale of its operations in England (Celatose U.K.), its Texor Div. and its factory in Spain. In December it appeared that an investor was bringing an infusion of cash into the principal operation in France in return for a controlling interest.

In Sweden, towards the end of the year, the often-changing ownership of Holmens-Hygiene seemed to have settled down with the purchase of the company by Wilbergs Industri, a part of the Aktivate Group, and the annoucement that Einar Lundmark would be the managing director of the baby diaper and feminine hygiene operations of the company.

Mr. Lundmark had previously been the managing director of the Fibre Converting Machinery in Sweden and, with his resignation, Barry Hogarth was appointed to lead the diaper machinery company.

In the middle of the year, the court in Paris handling the lawsuit of Peaudouce vs. P&G on the frontal landing tape decided that the Peaudouce patent calling for a smooth product was valid, but that it was not infringed by P&G's diaper, which had an embossed frontal tape.

Swaddlers in the U.K. introduced a boy and girl version of its baby diaper in an attempt to raise its sliding market share, which had fallen to 8% by the end of the year. At the same time, P&G's share in the baby diaper market in England had risen to more than 40%, a great deal of which was attributed to the reduced price at which Pampers were being sold in England.

Franck Courtray, formerly of Peaudouce, announced the opening of his Labservice organization in Lille for the testing, controlling analysis and research products in the sanitary absorbent field, and in the same city, Charles Luguet, previously director of purchasing for Celatose, started Z.L. Consultants firm.

In the Far East, James River dedicated its new diaper manufacturing facility with a formal ceremony in Korea.

The Gathering Storm

All of these developments have taken place with the concurrent growing interest that a large number of mothers have shown in returning to reusable, washable cloth disposable diapers brings the environmental and disposabil-disposable diapers bring the environmental and disposability problems into sharp focus and the year 1990 will be a time when all disposable sanitary product manufacturers must do everything they can to lessen the negative impact on the environment by the products that they produce.

If not, the "gathering storm" will envelop us and the costs of fighting the battle against increasingly negative legislation will be far greater than if we wage the fight to reduce waste on the production lines and also design products that are truly recyclable rather than merely cosmetically biodegradable.

PHOTO : Kimberly-Clark's upstanding cuffs, also called leakage control shields, were among the

PHOTO : year's more interesting new product designs.

about the author Francis Bouda is perhaps the most well-known consultant to the baby diaper industry worldwide. He is a frequent contributor to Nonwovents Industry and is a popular speaker on patents and personal products at industry events. Most recently Mr. Bouda was keynote speaker at the Pira Conference on Absorbency in Aarhus, Denmark in November. He operates his international consulting business from Cleveland, WI.

[Tabular Data Omitted]

Francis Bouda is perhaps the most well-known consultant to the baby diaper industry worldwide. He is a frequent contributor to Nonwovens Industry and is a popular speaker on patents and personal products at industry events. Most recently Mr. Bouda was keynote speaker at the Pira Conference on Absorbency in Aarhus, Denmark in November. He operates his international consulting business from Cleveland, WI.
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Title Annotation:Markets for Nonwovens; includes related articles; challenges of disposability and competition
Author:Bouda, Francis
Publication:Nonwovens Industry
Date:Jan 1, 1990
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Next Article:Profitability: and the factors that drive it in the U.S. absorbent products business; the results may be eye opening to some industry observers.

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