Demographics a Glacial Movement Potentially Threatened by Global Warming

Rumours abound that nappies/diapers have perhaps had their day. A logical conclusion; birth rates in Western Europe, as across much of the developing world, are low and the population is steadily ageing. Allied to this manufacturer’s not inconsiderable efforts to normalise incontinence products in retail, efforts which have somewhat eye-catchingly expanded distribution from the confines of health and beauty specialist into supermarkets, the mainstream. The evidence is clear then; nappies/diapers are yesterday’s news and incontinence is now driving the hygiene market. Not true.

A Japanese example

With the most aged population globally (23% of the population is 65+ in 2012), Japan is perhaps a glimpse of the future for developed Western markets, on a similar demographic path. In Japan, incontinence sufferers are largely expected to purchase their own products in the retail channel and receive little government support, unless institutionalised. In an age of austerity in Western Europe, where health care provision is increasingly being pushed back onto consumers, Japan does appear to offer an intriguing future market view.

Looking in terms of manufacturer sales price (MSP) total incontinence sales did overtake nappies/diapers in 2010, with domestic giant and market leader Unicharm announcing in 2012 that its own incontinence sales had overtaken those of nappies diapers.

Follow the leader

Although some way behind the example set by Japan, it is likely that MSP incontinence sales will become the significant market force in Germany by around 2017 and Italy by 2020 although other nations with more buoyant birth rates such as the US, UK and France will continue to see value for nappies continue to maintain the majority for some time to come.

Weight of numbers

Value sales are only part of the story; hygiene remains a volume industry and unit sales forecasts put a slightly different spin on the story. In spite of being in the majority (30
million Japanese are over the age of 65 in 2012), it won’t be until the population hits 35 million in around 2017 that there will be sufficient weight of numbers for incontinence to emerge as the dominant volume category, which is a whopping 28% of the total population.  Germany for example, as one of the most aged populations outside Japan, will still only see 23% of its population in the 65+ bracket by 2020, meaning here and in other Western markets, nappy sales will still proliferate the hygiene market, so the well documented ‘dash’ to incontinence, while a lucrative opportunity is not always indicative of wholesale structural volume change.

All that glitters

True, perhaps, dynamic growth is long gone from much of the nappy/diaper category in the developed world, but still the pace of growth of incontinence will only be driven by incidence (of incontinence) within the wider population and further normalisation of product. Long term projections suggest the incontinence category not reaching dominance in terms of unit sales past 2025 in the case of Germany for example and for counties with a more positive birth rate such as the UK and the US this could well be a decade or more later.

While the demographic landscape slowly shifts in favour of incontinence over the coming decades, the pace of change may itself turn out to temper what is a huge sales opportunity for the industry. Austerity, sharpening the desire to lighten the welfare bill together with the widening availability of medical procedures as well as drugs designed to help control incontinence mean that full market expansion is not a certainty or any guarantee that ageing will ever compensate for low birth rates.

Ultimately nappies/diaper sales may well turn out to be more reliable long terms bets, so we should be mindful of not throwing the wearer out with the bath water.