Getting to the Bottom of the Diaper Wars

From Bloomberg News

For the first time, someone who knew this product first cheek is old enough to be president.

Disposable diapers are 35 years old, but the pulpy pads of the past have been superseded by diapers that breathe, don’t leak or smell and absorb more. Now, thanks to Houston-based Drypers Corp.’s latest addition of aloe vera, they can soothe babies’ bottoms.

The No. 3 branded diaper has survived by coming up with product differences. Drypers spends $25 million on all its marketing, including the cost of coupons and retail allowances. The diapers with aloe vera feature Sesame Street characters.


Soon after it was formed in 1987, Drypers put space on diaper packs for parents to label them with their babies’ names. Next came “perfume-free” diapers and “winter diapers” with seasonal illustrations.

“Innovations are the lifeblood of the diaper business,” said W. Dudley Lehman, group president of the Infant and Child Care sectors for Dallas-based Kimberly-Clark Corp., whose Huggies lead the $3.8-billion U.S. diaper category.

That hasn’t convinced Kimberly-Clark nor rival Cincinnati-based Procter & Gamble Co., which makes Pampers and Luvs, to offer an aloe vera diaper. Nor have either followed Drypers’ introduction last year of baking soda in diapers.

“Additives are polarizing,” Lehman said. “It can give Drypers a distinctive position but it appeals to too small a segment. Huggies appeals to a broad consumer base.” Still, “if Americans demand aloe vera, we can very easily do that,” he said.

“No one is clamoring for diapers with baking soda or aloe vera. They are clamoring for simplicity,” Procter & Gamble spokesman Scott Stewart said. There are more than 70 different sizes and varieties of diapers and training pants now on the market.


Terry Tognietti, co-chief executive officer and president of Drypers North America, said that in some markets P&G; is telling parents that because diapers with baking soda don’t smell, they’re left on too long. Tognietti said that 73% of parents surveyed claimed they’d buy diapers with aloe vera.


It’s been tough for Drypers to keep up with its rivals, which each spend about $60 million a year on advertising. In June 1995, 15 months after it went public, Drypers defaulted on $17 million in loans. Hobbled by a price war instigated by its rivals and a sharp increase in pulp costs, Drypers cut its prices 17% to stay competitive and flirted with bankruptcy, only finding relief when pulp prices suddenly plunged.

Last year, sales increased 33.6% to $60.2 million and net income grew to $2 million. Domestically, Drypers has about a 4% market share compared with 22% for Pampers, 14% for Luvs, 34% for Huggies and 20% for private labels. Robert Maples, an analyst at Cleary Gull Reiland & McDevitt Inc. calls Drypers “a thorn in the side of national brands.”

Selling for around 10% less than regular Huggies or Pampers, Drypers competes directly with P&G;’s Luvs. Tognietti said 15% of shoppers are “price buyers” and that 35% of all diapers are sold on promotion--with coupons or other incentives.

Luvs advertising “appeals to experienced moms and stress the brand’s premium performance at less than premium price,” Stewart said. Pampers ads focus on dry, happy babies while ads for Huggies Supreme and Pampers Premium emphasize the construction and technology that warrant a higher price.

Chad Brown, an analyst with Nesbitt Burns, said “consumers really do pay attention to feature improvements but brand loyalty declines over the 2 1/2 years of diaperhood as parents realize premium isn’t all that critical.”

Drypers is not the only innovator in this battle for bottoms. Kimberly-Clark has come out with tape closures, thinner diapers, leak guards, cloth-like covers, hook and loop fasteners, “breathable” outer covers and stretch sides. And it invented training pants and pants for older kids who wet their beds.


And P&G; invented disposable diapers themselves. The story goes that a P&G; engineer was changing the cloth diaper on his first grandchild and determined there had to be a better way. Its first diaper bombed--the elasticized plastic pants were hot as a Turkish bath.

In 1988, P&G;’s Luvs introduced gender specific diapers. Pampers and Huggies followed in 1989 and four years later only 12% of diapers were unisex. Now, all those boy or girl diapers except Huggies have gone into the nappy pail.

Innovations keep coming because this is not a market to sniff at. With 9 million babies getting changed six times a day for, say, 30 months, that’s about 5,400 diapers per kid during his diaper-wearing life. And there’s big potential. Only 10% of all worldwide diaper use today is disposable, though in America it’s 93%, up from 90% in 1990.