As the demand for diapers has fallen, the two biggest companies in the market have found a way to raise prices while keeping sales steady.
The need for diapers has declined in recent years as Americans have fewer children. In fact, the number of babies born in the U.S. last year fell to a 32-year low, dropping 2 percent from 2017 to 3.79 million births.
Procter & Gamble, which makes Pampers and Luvs, and Huggies maker Kimberly-Clark account for 80 percent of U.S. sales combined. Both companies have been able to boost diaper prices without losing sales to less expensive brands by developing diapers that do everything from softening babies’ behinds to tracking their sleep.
“We’ve far from exhausted that lever,” Kimberly-Clark Chief Executive Michael Hsu said in an interview, according to The Wall Street Journal. “There are bigger problems for the consumer that we can still solve.”
This month, Kimberly-Clark launched Huggies Special Delivery, which is made from plant-based materials and costs around five times the cheapest diaper on the market. For its part, P&G has partnered with Google’s research division to develop a diaper system called Lumi that includes a separate webcam. It boasts monitors and activity sensors that track when babies sleep and go to the bathroom, sending alerts directly to parents’ phones. P&G hasn’t revealed how much the system will cost, but it is expected to hit the market later this year.
Many of these new products are being launched in China, where parents are willing to pay more for diapers in categories P&G refers to as “super-premium” and “super, super-premium.” The company's latest offerings include all-natural diapers and ones with extra-sturdy fasteners.
“Moms and dads dwell appropriately on their babies,” noted P&G CEO David Taylor. “There is evidence that if you provide a meaningful benefit, consumers are generally willing to pay.”