The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
American consumers have become more aware of the ingredients that make up their everyday household products, and concerns over product composition have also been manifesting themselves within the American nappy/diaper category.
In 2014, the US nappies/diapers/pants category was flat in constant retail value terms at US$5.9 billion and saw less than 1% growth in volume terms. Retailing at a premium, products with natural/green claims provide an opportunity for revenue growth. However, these come with their share of risks to the manufacturers that choose to go down the green road.
Although diapers with natural claims are still a niche category in the US, they are certainly drawing more parental attention, as exemplified by the stellar performance of The Honest Company, which is now being valued at US$1.7 billion dollars. While the company has made headlines due to its famous co-founder Jessica Alba, and the company’s product development and distribution strategies are impressive, it is the way the company markets itself that might provide insight into the changing parental shopping behaviour in the US. Honest Diapers are marketed as being as natural as possible and as maximising plant-based ingredients, while one of the company’s core promises includes transparency: “Go ahead, ask us anything. We’ll tell all.
Some of the mainstream brand manufacturers and private label players have also been eyeing the natural diapers niche. While they can efficiently utilise their brand name recognition and wide distribution networks, as opposed to niche brands, mainstream brand extensions with natural claims also need to be well aware of an informed consumer and show commitment to the development of a product that can pass consumer scrutiny in terms of ingredients and product claims.
Natural diapers, though a niche category, can provide a way for the manufacturers of nappies/ diapers in the US to increase revenues in an otherwise mature market with weak birth rates and a strong tendency by many consumers to look for promotions and discounts. Diapers with natural claims are sold at a premium. For example, at the US retailer Target, Honest Diapers sell for an average of US$20.79 (size 5), or US$0.42 per diaper. This is higher than standard diapers and even higher than some other green diapers, such as Seventh Generation, which offers a 144-pack of diapers at Target for between US$30.74 and US$40.99, or US$0.21-0.28 per diaper.
Kimberly Clark recognised the opportunity with the launch of Huggies Pure & Natural in 2009, the first “natural/green” move by a mainstream manufacturer in the US.
That being said, however, manufacturers need to be aware of an increasingly well-informed consumer. The average age of a first-time mother in the US is 26 years, meaning that most first-time mothers grew up using the internet and are savvy in using online tools and social media to discuss the pros and cons of each product and to seek out more product information and reviews.
Both The Honest Company and Huggies Pure & Natural are advertised as “natural” and “eco-friendly”, but the two brands are seen in very different lights in the eyes of the consumer.
Currently, Huggies maker Kimberly-Clark is being sued in federal court for allegedly misleading statements about its natural diapers. The issue lies in the use of a soft organic cotton liner and where it is placed in the diaper in order to differentiate Huggies natural diapers from Kimberly-Clark’s mainstream diapers. The suit questions whether the addition of organic cotton liner justifies claims of a natural product. It is just one example of how consumers view and scrutinise natural/green claims and demand information in order to make purchasing decisions based on such a claim.
Two specific problems have arisen for large manufacturers in this new age of parental purchasing power for diapers. First of all, more consumers are looking at the ingredients listed on the product package or website, and, secondly, manufacturers and consumers are often at odds with respect to what constitutes “natural”.
In the Euromonitor International Global Consumer Trends 2015 survey, 36% of 15-29 year old parents mentioned that the term “100% organic” was something that they looked for when buying children’s products, compared to 20-23% of parents in the age groups of over 30. Additionally, 40% of young parents look for “all natural”, compared to 24-27% of parents in the age groups of over 30.
However, as exemplified by the law suit above, organic and natural product claims are being scrutinised more by parents to assess the validity of such claims in their eyes.
Millennial parents are therefore on the look-out more for organic and natural claims. However, value for money is high on young parents’ agenda as well.
According to the Euromonitor International Global Consumer Trends 2015 survey, 70% of US parents aged 15-29 indicated that value for money was a feature they looked at when buying children’s products, compared to 50-62% of parents over the age of 30. Additionally, for 60% of young parents price is important, compared to 29-47% of those in the age groups of over 30.
Hence, younger parents provide a more receptive demographic group for natural and organic claims, but they are also more concerned about price and value for money. Subsequently, the ability to convince consumers they are getting good value for their money and providing cost-efficient shopping options are important to successfully respond to consumer interest in children’s products with natural/green claims, including diapers. The Honest Company, for example, has tackled the issue of price by offering a monthly subscription service that bundles diapers and wipes together at a more advantageous price and better value in terms of cents per diaper. Parents are certainly taking advantage of the offer, considering that the lion’s share of Honest Diapers sales come through the subscription service.
While interest in more natural products for children is on the rise, manufacturers must tread carefully in the world of natural claims and ultra-observant tech-savvy consumers.
Ingredient transparency, validity of claims and good value for money are important components of success. Many parents, and millennials in particular, do look for children’s products that are seen as more natural and, by extension, healthier. However, they do not take claims of “natural” at face value. Furthermore, while being prepared to pay a premium, parents are still looking for a cost-efficient solution to buying diapers, considering the amount of diapers a child goes through in a year.
Taking advantage of green trends requires commitment and investment into ingredient and product development that pass modern-day parents’ scrutiny as well as innovative strategies in product distribution that provide parents with more affordable pricing solutions, such as online and subscription services that offer bundle/bulk purchases.