Emerging Markets: Ripe for baby wipes

By Beyhan Tamer,, Sales and Market Development, Mogul | September 16, 2011

Emerging markets represent four out of the top six markets in the world for diapers, by value, but none of the top six markets for baby wipes, according to the latest retail data. It is a telling disparity that exposes the fundamental weakness of baby wipes outside the world’s richest nations.

Baby wipes are omnipresent in the retail sectors of Western Europe and North America, and this goes hand in hand with a growing culture of convenience consumption. Today, most parents are as discerning about baby wipes as they are about diapers. And, to boot, there is fierce competition between Procter & Gamble, Kimberly-Clark and Johnson & Johnson, as each bids to entice parents to their brands. To this end, Pampers recently revamped its baby wipes portfolio with new packaging and new names. The focus was on clearer segmentation, for example, between thick and thin sheets. Indeed, the depth and dynamism of segmentation in baby wipes is itself indicative of a FMCG (Fast Moving Consumer Goods) category in tune with its consumer base.

In emerging markets, the value of turning baby wipes from dispensable into indispensable would be hugely significant, not least because the category's highest value-developed markets are aging, with slow birth rates. It is relevant to consider, for example, that of the top 20 forecast growth markets for diapers – in absolute terms (meaning actual additional value) – these markets should be ripe terrain for new baby wipes business.

Quite simply, both the demographics and the economics are more favorable in Latin America, Asia-Pacific and the Middle East/Africa than in either Europe or North America. And these macro variables are made all the more compelling by the category’s actual value opportunity. The disparity between the UK and Mexico bears this out. Specifically, provisional data for 2010 shows that the baby wipes category is worth around $340 million in the UK, some 17 times higher than in Mexico. Yet, Mexico's baby population (aged 0-4 years) is more than two and a half times larger.

On-shelf competition is fierce in the baby wipes market.
Given the growing global homogeneity of FMCG consumption culture (and this is especially visible between the US and Mexico), it is reasonable to assume that the perception of baby wipes will be subject to revision in Mexico, and other emerging markets too. There is already evidence of this happening in Brazil, which has a similar economic and demographic profile to Mexico. Strikingly, absolute growth of baby wipes in Brazil, to 2014, is forecast to be the second biggest in the world, after the US. Turkey and China also look promising, yet the wider picture still puts baby wipes among the tissue and hygiene industry’s low impact emerging market categories.

Globally, the baby wipes retail market is worth about $3.7 billion a year, compared with more than of $31 billion for diapers. That gap needs to be narrower. For example, if the diapers and baby wipes categories in the US are used as a benchmark, the global baby wipes market should be worth something closer to $6 billion. The current shortfall is almost certainly arising from underperformance in emerging markets. As 2011 takes shape, there has, arguably, never been a better opportunity to do something about it. The dominant diapers players have formidable emerging market momentum on their side, but surely it is time to develop a more effective, revamped strategic approach for their baby wipes.

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