Investment continues in disposable diapers—not just in new manufacturing space. In recent months, a number of entrepreneurial diaper brands have announced private equity funding that will help them expand their scope and improve on technology.

One of these, Rael, recently increased its total funding to $59 million thanks to a recent round of financing that will allow it to expand its 360-degree approach to women’s wellness, accelerate growth at retail by expanding partnerships and investing in brand and trade marketing, and advancing its global expansion. Another startup, New York-based Coterie, recently received $23.8 million during its latest round of funding to help it develop uniquely cleaner and higher performing diapering solutions.

New brands like Rael and Coterie have been following in the footsteps of The Honest Company, which introduced a unique brand of baby diapers online in 2012, and saw a path to enter the market by partnering with contract manufacturers to develop products and launch online through direct-to-consumer channels. While Honest, which was founded by actress Jessica Alba, has largely had a strong e-commerce presence, the brand recently announced it will expand into Walmart stores nationwide.

A decade after Honest first started making diapers and selling them online, the proliferation of new products continues to change the market as hygiene startups have chipped away at the marketshare of some of the major brands in hygiene and equity investors are noticing. Impressed by the brands’ growth trajectory and customer loyalty, many are banking on their ability to go the distance in this market.

Also banking on this success is Ontex, the European hygiene manufacturer, who has helped make contract manufacturing of diapers and hygiene products more accessible to startup companies. Earlier this month, Ontex announced it had added a new site in North Carolina to complement its existing diaper plant in Tijuana and expand its role in the growing “partner brand” market in North America.

As these start-ups, either on their own or with partners like Ontex, continue to develop new products and brands to meet the changing needs of hygiene customers, industry experts predict that they will also provide valuable insights into understanding consumer wants­, which will not only influence these smaller companies but also the big guys like Procter & Gamble, Kimberly-Clark and Essity.

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Karen McIntyre
Editor
[email protected]