How Procter & Gamble And Kimberly Clark Compete In Diaper Battlefield?

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The two most prominent names in the diaper industry, Procter & Gamble (NYSE:PG) and Kimberly Clark (NYSE:KMB) have long been posing fierce competition to each other in the baby care segment. P&G’s Pampers and Kimberly Clark’s Huggies have been the most preferred diaper brands among the mothers around the world till now. Recently, however, both of these companies started facing tough competition from local diaper brands in major economies like China and America, due to which both have suffered a deceleration in revenue growth. Despite this, both  companies account for around half of the baby diapers sales of the world. We will be comparing both the brands on the basis of their regional stronghold, pricing and quality.

Pampers Priced Less

On comparing the prices of Huggies and Pampers on Amazon, it can be noticed that Huggies are slightly higher priced than Pampers. This is in addition to the fact that Pampers is an older and more established brand than Huggies. Hence, consumers often go with the former one. Also, Pampers have relatively counts per pack as compared to Huggies, which makes their cost per diaper marginally lower. Recently, P&G’s sales suffered a bit as Kimberly Clark decided to lower the price of Huggies product line—hence, initiating a price war between the two giants.

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Pampers And Luvs Boast A Better Quality

On analyzing the customer reviews for both the brands through various websites and videos, a majority of customers rated either Pampers or Luvs higher over Huggies, due to their better absorption quality, softer cloth material and easy locking mechanism. Considering the fact that pricing of the two brands is comparable, parents are bound to prefer Pampers over Huggies. Due to this fact, Kimberly Clark has planned to ramp up is R&D and marketing activities, but it may take some time for these benefits to flow.

Regional Strongholds : KMB Growing In China As P&G Holds The US Market

With China ending its one child policy, the country has become one of the most important regions for both companies, with a potential to boost their sales significantly. Driven by high volumes, Kimberly Clark clinched the battle in China with a 25% organic sales growth in 2015, though P&G remained the market leader. The growing middle class ironically preferred higher priced premium Huggies products as compared to strategically lower priced products from P&G. Kimberly Clark also has an R&D facility in Korea through Yuhan Kimberly, as it focuses on developing products which are more specific to Asian babies.  This model for regional R&D has been successfully exploited by Japanese brands like Merries, Moonies and Goon.

P&G on the other hand is gaining share in US market with its lower priced products as Americans stayed away from top end diapers. As miscalculated by P&G, the premium buyers exist in Asia due to rising middle class, contrary  to the already developed more experienced buyers in America, whose preference is based on utility. So, the company is aiming to premiumize its product line in China to compete better with KMB. On the other hand, Kimberly Clark has been consistently losing share in the US diaper market. According to the report from P&G, it held 45% share in US diaper market as opposed to KMB’s 37% as of mid 2015.

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