Nigeria in Focus: Dynamic Baby Diapers Marketplace
As Sub-Saharan Africa’s largest and increasingly diversified economy, with rising disposable incomes and levels of education, urbanization and ongoing investments into infrastructure development, Nigeria’s marketplace has seen significant growth across a number of consumer goods, including absorbent hygiene products. Within retail absorbent hygiene, nappies/diapers/pants is the largest category by value and volume in the country.
Per capita use of nappies/diapers/pants in Nigeria remains very low, compared to developed markets, thereby creating a foundation for further expansion.
Consumer purchasing patterns shaped by available disposable incomes
The nappies/diapers/pants penetration rate in Nigeria stands at around 5%. Disposable nappies are hardly ever used in the rural areas, which represent half of the Nigeria’s population. Even in urban areas usage is often restricted to occasions like outings. Additionally, many families are too poor to afford nappies/diapers on a regular basis and stock in bulk. Instead, they only buy the products when they can afford them and in small quantities they can afford at the time of purchase.
For the majority of consumers who do not fall within the upper income brackets, there must be a very strong balance between quality and price. On the one hand, this makes large pack sizes – 100 units or more – the strongest growing pack sizes in Nigeria, as this offers the best value for money. This is a preferred choice of middle class consumers who can afford to pay upfront for a large pack size. On the other hand, small pack sizes sell well, since the majority of consumers cannot afford to pay for a large quantity at once. Subsequently, retailers frequently open up larger pack sizes and sell individual units to meet the needs of cash-strapped parents. Responding to the trend are a number of new product launches that offer small size packages, such as Grandex Nigeria Ltd and its small size packaging featuring only 3 units under Mary Diamond diaper brand. Procter & Gamble’s Pampers is now selling a 10 unit pack.
Wemy Industries: understanding and responding to local needs
Encouraging the consumer demand for diapers in Nigeria is the growing number of brands that have entered the marketplace over the past few years. In early stages of category development in the country, Pampers had been synonymous with a diaper. For a consumer in Nigeria, asking for Pampers in store had been equal to asking for ‘diaper’ rather than any particular brand. However, the SKU count has risen dramatically over the past few years, with more choices also available to price sensitive lower income parents. Many of the brands are imported, as Nigerians tend to see imported products as of better quality. On the other hand, domestic manufacturers historically have faced significant challenges, such as poor electricity supply and a bad road network. These have impacted price and quality of the products they offered. Nevertheless, some local companies have risen through the ranks and have been increasing their share of sales within the country’s fast growing nappies/diapers/pants category.
Wemy Industries Ltd is the leading domestic player in Nigeria, with growing recognition behind its Dr Brown’s brand across retail hygiene products. Despite challenging operating environment, characterised by high business costs, poor infrastructure, and corruption, Wemy Industries has performed strongly in Nigeria, capturing third position in nappies/diapers/pants in 2014.
The company’s strategy focuses on synergy, innovation, and widening retail distribution network beyond major urban centres.
Having increasing presence across hygiene categories, Wemy benefits from economies of scale and therefore can be more price competitive. Despite fairly low prices, the company produces and markets quality products, with strong investments into product innovation to compete successfully with large multinationals. Furthermore, the company is fast to react to developments in value segment to meet the demand of price sensitive consumers. When Procter and Gamble introduced 10 diapers in a pack, Wemy Industries’ Dr Brown’s met that with a 14 unit pack size at a comparable price and a high quality product. Additionally, the brand now offers the widest range of diaper sizes in the market, enabling it to increase further its consumer reach and household penetration.
Moreover, understanding the need for wider consumer reach and in the conditions of weak infrastructure, Wemy Industries adopted creative supply strategies. It started using tricycles, in addition to regular vans and trucks, thereby allowing the company to get its products to hard to reach areas. This strategy bodes well with the current distribution landscape in Nigeria, where the vast majority of diapers is still sold through the small independent grocers.
Positive outlook ahead
Nappies/diapers/pants category has a lot of potential to grow in the country where birth rate outpaces that of many developed Western markets. Importantly, Nigeria’s middle class is set to increase from 9.8 million households in 2014 to 11.3 million households in 2019, adding to the increasing purchasing capacity in the marketplace.
The above tendencies, coupled with the growing women’s participation in the labour force, are expected to fuel further the demand for nappies/diapers/pants. However, to increase market penetration of diapers further and ensure steady long-term growth, manufacturers and retailers need to engage low income urban families and parents living outside of major urban areas (typically also with low disposable incomes). This calls for a set of strategies in product development, marketing and retail distribution – from wide range of products across price segments to product access beyond wealthier major urban centres.
Major international brands by Procter & Gamble and Kimberly-Clark continue to cater to the needs of the rising middle and upper earners with higher disposable incomes and launch higher quality products, such as late 2014 entries by Pampers Baby Dry and Huggies Pure and Natural. At the same time, Kimberly-Clark is joining Procter & Gamble in expanding local production, which might help also to take advantage of lower tariffs on imported raw materials, thereby reducing the costs and offering high quality products at competitive prices.
Further improvements in the operating environment and infrastructure, and import tariffs policies that favour local production, are expected to help domestic players to gain further strength in the country. Local players would be much more capable of competing and providing lower priced and better quality products, helping to improve competition and demand.