In 2012, Japanese manufacturer Unicharm announced plans to expand its nappies/diapers operations in Latin America via production sites in Brazil and Mexico. Production in Brazil, where nappies/diapers/pants sales reached US$3 billion in 2013, is set to commence in early 2014.
But what brings Unicharm to Brazil? Growth in nappies/diapers is set to slow, with a 2.3% constant value CAGR predicted over the 2013-2018 forecast period compared to 8.5% over 2008-2013, which suggests that the company may well have missed the boat. The market is reaching maturity, at least in volume terms, with penetration standing at 65% in 2013, and there is also the difficulty in gaining distribution in what is becoming an increasingly competitive retail channel.
Pants Just for Potty Training? Not in Asia Pacific
At first glance, it appears that Brazil offers less growth potential than, for example, emerging markets in the Middle East and Africa, where nappies/diapers usage is still in its infancy. However, Unicharm could gain a foothold in the market by focusing on disposable pants, in which it holds a competitive advantage. The company has developed highly efficient production techniques which have already helped it to succeed in low-income countries such as Indonesia and Thailand, where disposable pants account for (a somewhat surprising) 50% of total nappies/diapers sales.