The market for nonwovens in Eastern Europe continues to grow, driven by increased demand for hygiene products in countries like Russia, Poland, Czech Republic and Slovakia. This growth is being led by increased disposable incomes, which allow more consumers to use hygiene products. This, coupled with a more sophisticated, and lower wage, workforce has fueled interest among nonwovens manufacturers like Union Industries, an Italian manufacturer who chose Poland for its first foreign investment—a large-scale spunmelt line, or Avgol—the Israeli manufacturer that is adding its second spunbond line in Russia.

Outside of hygiene, Freudenberg Politex, Fibertex Nonwovens and Johns Manville have all committed to the region, attracted by demands created through infrastructure improvement projects and a high growth potential.

According to Euromonitor, the diaper market in this region is largely dominated by Procter & Gamble, who holds a 60% share in Poland, 41% in the Czech Republic and 38% in Russia. P&G’s dominance is won through its strong global reputation for Pampers, effective marketing support and a wide distribution network, and the Pampers brand was able to gain marketshare points in all three countries between 2013 and 2014. Additionally, P&G offers a range of products, and Euromonitor is finding that as economies improve, more Eastern European customers are trading up, opting for premium products instead of value.

However, moving forward growth is likely to be constrained by a decline in the birth rate, which began in 2013. Despite this, growth is expected to continue thanks to rising household penetration and a growing focus on hygiene and convenience. This trend will be encouraged by ongoing growth in disposable income levels and a further rise in the percentage of working mothers.
That being said, the percentage of children agedzero to one year old using nappies/diapers is expected to rise by an impressive 13 percentage points during the forecast period to 69%. Meanwhile the percentage of 2-3 year-old children using disposable pants will rise by almost three percentage points to 17%.

Russian Growth
The Russian nonwovens industry is growing, reflected by the increasing volume of domestic production as well as the launch of new investment projects. During the period of 2007-2012, the volume of nonwovens production in Russia increased by 7.6% to 2.4 billion square meters.

Growth has largely been driven by the Putin-era raw material-fueled economic boom, which has stoked a rapid rise in disposable incomes—doubling between 2008 and 2012—to $8000, placing Russia in a rapid growth phase for hygiene category development. While the key disposable income driver is in place, the Russian market has attracted still more attention due to its relatively low hygiene penetration rates. This has encouraged inward investment in terms of plants and technology. However, recent measures imposed by the Putin administration have made foreign investment in nonwovens and textiles difficult. The Russian market has responded by developing its own products to help feed local consumer demand for disposable products, which has been illustrated by consistently strong growth posted by Pampers and Huggies diapers. Much of this demand is associated with growing numbers of women in their mid-30s and 40s having children.

For very similar reasons to nappies, sanitary protection in Russia has also made some significant progress in terms of value sales, seeing double-digit growth. This is in spite of the number of women ages 14-54 stagnating; the category has even seen some volume gains made on the back of widening use of panty liners, but most significantly it has been driven by ‘premiumization.’

Sanitary protection added approximately $250 million of incremental value growth between 2008 and 2012, roughly 20% of total growth for the hygiene industry as a whole. This trend is set to continue, however, unlike nappies/diaper sales, a declining population of suitably aged women in Russia will mean that product development will be key to maintaining premiumization without the help of an upswing in consumers.

Baby wipes in particular and personal care wipes in general remain largely underdeveloped in Russia and given incomes and fondness for branded goods as well as convenience this should be a category to watch. Also in the longer term, incontinence will be a key development category, although there is much work to do to introduce this product category as a normalized part of retail and break many of the social taboos associated with this product type.

In both cases, there is a clear need for investment in consumer education and product promotion in order to break open this untapped market, which will grow as disposable incomes climb to and beyond the $10,000 mark by 2020.

By The Numbers
According to data supplied by Euromonitor, adult incontinence is posting the strongest gains among the disposable categories. Like in the rest of the world, growth is being driven by the aging population but is coming from a much smaller base than more established hygiene categories like diapers or feminine hygiene. The Russian market is posting the strongest growth at 11.4% and that market is also seeing the strongest growth in diapers, 8.7%, and feminine hygiene, 6.7%.

Also showing strength is the Czech Republic, home to the region’s largest nonwovens producer Pegas, which is growing 6% in incontinence but is basically flat when it comes to diapers and feminine hygiene. Meanwhile, Poland is reporting 4% incontinence growth and 1.4% diaper growth but a slight decline in feminine hygiene.