Baby Diaper Wars Nigeria

Tunji Adegbite

Baby Diapers are underwear worn by infants to catch waste and is usually made out of cloth or synthetic disposable material. In the past, animal skins, moss linens, and leaves were used; however, diapers have now been proven to be the safest, most convenient way. Cloth diapers are made out of fabrics such as cotton, hemp, or microfibers making them washable and reusable. While synthetic disposable diapers, first introduced in 1948, are made of absorbent materials that cannot be reused.

Innovations have since been made within the diaper market to segment the market further. There are now biodegradable diapers, pull up, pants or taped diapers (based on mode of wearing), and ridged or non-ridged (based on core and ability to absorb) diapers. However, disposable diapers still command the most market share; as of 2016, the segment accounted for 64% of the industry. The $3.4 Billion baby diaper industry is projected to grow to $51.5 Billion by 2024. Some of the factors influencing this growth are- high birth rate, rising income levels, and increased awareness of sanitation and hygiene.

North America and Europe are the biggest diaper markets globally while Asia and Africa are significant emerging growth markets. In Asia: India, Indonesia, and China are leading the growth in market share in the region. In Africa, Kenya and Nigeria are projected to see the fastest growth rate between 2020 and 2025 (2.9% and 13.3%, respectively)

7 Million Babies!

7 million babies are born each year in Nigeria with a ratio of 37.3 births per 1000 women. This figure should ideally position the Nigerian market as a prime market for diapers but this is not yet the case.

Nigeria’s high poverty rate, currency depreciation, and economic crises affect purchasing power. With a GDP per Capita of about $2,000 annually, about half of Nigerians live below the poverty line. It is estimated that the daily diaper usage per baby in Nigeria is between 0.05-0.10, compared to 8-10 daily in Developed countries. Poor hygiene practices also influence diaper usage. About 100 million Nigerians lack basic sanitation facilities, and about 12% still defecate in the open.

The ideal market size of diapers in Nigeria is approximately 2.07billion pieces annually; current consumption is about 1.75 Billion pieces annually. Brands driving this consumption are Pampers by Procter & Gamble, Huggies by Kimberly Clark, Molfix by Hayat Kimya, and a smaller players like Angel, Kiss Kids.

Inspired by babies. Created by Pampers

Pampers, the first major disposable diaper brand in Nigeria was introduced by Procter and Gamble in 2000 and controlled nearly 100% of the market share. Pampers was so well known that it became the generic name for the category. The brand enjoyed a market monopoly for 15 years and did little to innovate on its product or price, despite complaints about its high price- N45 for 1 Baby Dry size 3 diaper. There were also complaints that the Pampers sold in Nigeria were of lower quality than those sold in Developed countries. The only alternative at the time was the importation of foreign diapers.

Kimberly Clark, introduced Huggies to the Nigerian market in 2015 competing for market share with Pampers. Despite this, Pampers retained its position as the market leader in Nigeria. In 2016, Moflix entered the market and has since disrupted the market, toppling Pampers from the market leader position in Nigeria.

In response, Procter and Gamble did two things. First, they introduced ‘new’ products – some existing product lines already offered in Western countries to Nigeria. These were Pampers Baby Dry and Pampers Premium, positioned to compete with the new competitor’s products. They also commissioned and built a $300 Million diaper factory in Agbara, Ogun State – the largest investment in the country by a non-oil company then. The factory was shut down one year after launch; P&G claimed to be “restructuring”. Today Pampers controls less than 20% market share.

What went wrong?

1) Being comfortable in your position – they did not innovate nor listen to their customer’s complaints about the price and seemingly inferior products compared to those offered in foreign markets.

2) Failure to integrate backwards – Procter and Gamble had not invested in the local production of raw materials and relied on importing essential parts. Devaluation of the Naira and increasing foreign exchange rates raised production costs.

Happy Today, Happy Tomorrow

Molfix was introduced into the Nigerian market by Hayat Kimya in 2016 and it was ready for battle! Introduced during an economic recession where Nigerians’ purchasing power dramatically reduced, Molfix entered at a lower price (N26 for 1 Dry Pants size 3 diaper), while other brands were increasing their selling price. Molfix provided its products at a lower price and retained quality by reducing its production costs. They achieved this by investing $100 million into local raw materials production. Also, they generate their plants’ electricity. Their factory in Agbara, Ogun State, churns out 1.3 Billion diapers a year.

Research shows Molfix is the #1 diaper brand in Nigeria based on market share commanding about 44% of the market. It also has a brand loyalty of 70%, meaning 7 out of the 10 people that purchase the brand will repurchase it.

What is working for Molfix?

1) They came into the diaper market to fill a gap – affordable, quality, functional diapers that are readily available in the market.

2) They listen to their target market – through forums and events.

3) They leverage the power of community – providing both online and offline experiential events to customers.

4) Successful word-of-mouth marketing.

5) They speak directly to the journey parents are going through with their babies and toddlers.

In conclusion, although massive growth is forecasted, Nigeria’s diaper market is limited by economic and foreign exchange crises. As the economic challenges continue, purchasing power will drop and spending will be tightened. Many of the mid-middle and lower-middle-income Nigerians will take a dip in their socio-economic status. Brands looking to compete in this market will have to adjust and innovate to retain market share.

· Tunji Adegbite is a thought leader in Strategy and Supply Chain, who has worked with leading organisations like PwC and an IOC. He also founded Naspire, a business research platform using African business insights to help entrepreneurs and professionals succeed. He can be reached via tunji@naspire.com.