Low penetration magnifies the opportunity
The baby care category, which includes one brand, the diaper maker Anerle, increased 3 percent, after a decline of 25 percent a year ago when e-commerce competition from international brands impacted sales.
Since then, import tariffs have slowed market gains from international brands, and Anerle has continued to gain from the rescinding of China’s one-child policy. Annual births increased 11.5 percent to around 18.5 million in 2016, according to Chinese government figures, and around 45 percent of the births were to parents who already had one child.
The expansion of middle class, and the low penetration of disposable diapers, enhances the category’s potential. In addition, purchasing frequency is high for diapers. Families purchase diapers more than eight times per year, somewhat less than they purchase milk, according to Kantar Worldpanel, which also found that, after infant formula, the diapers sector is the most brand-loyal of fast moving consumer goods (FMCG).
The great potential for sales of disposable diapers attracted both multinationals and local brands. Japanese brands are especially strong in China. Brands competed for market share by introducing differentiating features, such as greater absorbency.