Tiger Moms Crave Diapers From Japan; Kao has a 30% market share in Japan compared with Unicharm’s 34%

July 4, 2013 Leave a comment

July 3, 2013, 12:07 PM

Tiger Moms Crave Diapers From Japan

By Mayumi Negishi

Japan’s second-largest diaper maker is apparently struggling to meet surging demand from Tiger Moms.

Kao Corp.’s breathable Merries diapers have gained a reputation abroad for being good for a baby’s development, appealing to mothers who want to maximize the head start they give their children, Kao Chairman Motoki Ozaki said in a recent interview.Mr. Ozaki said Japanese diapers are selling much better than expected in China, and also in Russia, fetching up to double their selling price in Japan–though only the made-in-Japan nappies are attracting premium prices, he added, not locally made ones.

“It makes sense that no diaper rash means a happier baby who will develop more quickly,” Mr. Ozaki said. “But we have been completely taken aback by the strength of demand.”

To meet that demand, the maker of cosmetics, detergent, and sanitary products says it will spend ¥5 billion on building a new diaper factory in northern Japan, while raising capacity at its two existing plants. The new diaper factory will be the company’s first in Japan for 12 years.

Sales of Merries diapers made in Japan jumped by more than 10% in the year ended in December, despite a stagnant market where bigger rival Unicharm Corp. has seen no growth. Those sales could expand even more this year, Mr. Ozaki said.

Kao has a 30% market share in Japan compared with Unicharm’s 34%, but it is a newcomer on the global stage. Half the international market is taken by P&G andKimberly-Clark , while Unicharm comes in at No. 3 with 10%, according to Unicharm figures.

But Kao is not counting on Tiger Mom demand to project its international presence over the long term. Lasting growth will come from lower cost products for Asia’s rising middle classes, Mr. Ozaki said, speaking on the sidelines of a consumer goods forum in Tokyo.

In an effort to catch up to Unicharm, Kao built a factory in China last year to make diapers that sell at roughly half the price of Japan-made ones. It is also building another ¥10 billion diaper factory in Indonesia to begin operation at the end of this year.

“The high-end users help give our diapers brand value, but we will continue to push hard in the volume zone in Southeast Asia,” with cheaper diapers, Mr. Ozaki said. “Diapers transform lives by lifting a huge burden. So there’s huge growth potential there.”

Filed under Macro Trends

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