Raw material shortages, supply chain disruptions and inflation have tested manufacturers and brands in the baby diaper market over the last few years. Adding to these challenges, birth rates in the U.S. have steadily declined during the last decade and a half. Despite these concerns, innovation is alive in the baby diaper category and new brands have continued to launch.

“The pandemic has served as a double-edged sword for the diaper industry,” says Sonali Jagadev, research analyst – Beauty & Fashion, Euromonitor. “On one hand, greater price sensitivity has weakened the spending power of the consumer. On the other hand, increased health and eco-awareness has popularized value added product features with clean origin, natural, plant-based and organic products. Now, some questions have arisen: how do you reach the point where value and quality can meet, and how do you get this balance in the post-pandemic world?”

Although the U.S. is a mature market, Euromonitor is still expecting to see modest growth for baby diapers over the next five years, with disposable pants driving this growth. Most of the growth seen today is not volume driven; it is price driven because of inflation, Jagadev adds.

Dyper CEO Sergio Radovcic says the supply chain has proven to be one of the most pressing challenges for young brands. “Between the pandemic, the raw material availability and fluctuating prices it creates a constant flux. Brands such as Dyper that rely on specialized plant-based materials and unique raw materials are often particularly disadvantaged and have to exhibit high resilience to assure uninterrupted supply to consumers. These and other challenges also present unique opportunities to innovate, something that comes naturally to young brands rooted in challenging the status quo.”

Pricie Hanna, managing partner, Price Hanna Consultants, notes that all competitors have been forced to raise diaper prices to pass through material and supply chain price increases. “To date, it appears that retailers and consumers alike have understood this and generally accepted the higher prices in the U.S. However, household budget pressures are increasingly motivating consumers to start to try lower priced diapers,” she explains. “The inflation pressures and consumer concerns are more intense in Europe due to more severe energy and food inflation hikes.”

In the U.S., diaper leaders have reported that private label share gains have happened but seem moderate, Hanna says, while in Europe, where the private label shares have historically been higher than the U.S., private label share growth has been slightly higher this year.

Recently, Jagadev has seen strong competition from private labels in the U.S. “Gone are the days when private labels were just considered as a cheaper alternative to the leading brand. Today, private label is not about cheaper—they are just as innovative as premium brands. Private label brands are continually evolving, and in recent years retailers have re-made their own brands by integrating popular product features such as plant-based ingredients, biodegradable, sustainably sourced, soft for baby’s skin, along with eye catching packaging and targeted marketing language. It’s further clouding the line between national brands and private label.”

First Quality, a manufacturer of both branded and private label absorbent hygiene products, expects to continue to see a lot of growth for private label in the year ahead, according to Sima Delafraz, chief commercial officer at First Quality. “In the current economy, more consumers are reconsidering private label options,” she says. “This is an opportunity for retailers to invest in their own diaper brands and take a holistic approach to building consumer loyalty. Doing so means understanding consumers’ lifestyles and preferences and delivering personalized products and experiences that meet those needs.”

But today, competition is no longer just between the top multinational brands like Pampers and Huggies and private label. Over the last decade, the proliferation of new brands in the disposable baby diaper market has continued to alter the category. By partnering with contract manufacturers, building omni-channel strategies and utilizing social media, smaller independent brands like Honest, Hello Bello and Dyper have been able to make a minor dent in the market.

Ontex, an international supplier of personal care products, is capitalizing on the growth of private label and independent brands with its new facility that opened last summer in Stokesdale, NC. The plant currently manufactures baby diapers for retailers and lifestyle brands and will ultimately expand its production and workforce to manufacture products for other product categories. The Stokesdale facility complements Ontex’s plant in Tijuana, Mexico, in supplying the growing partner brand market in North America.

In fact, the company’s strategy is to be the number one partner for partner brands—retailers, online lifestyle brands and healthcare facilities, according to the company.

Ontex already has a significant position in the European partner brand business. While its position is smaller in North America, Ontex sees this region as a strategic growth platform and is making structural investments in the region to support the group.

In July, Ontex’s Mexican business activities, excluding its Tijuana site, was sold to Softys S.A. as it concentrates on its partner brands and healthcare business. In recent years, the Tijuana site has become a contract manufacturing hub for Ontex’s partner brands business.

“We have grown double-digit in North America and expect to maintain that momentum in the future,” says a company spokesperson. “The agreement with Softys to divest our business in Mexico and Central America to them, does not include the Tijuana factory, which remains in Ontex’s scope to supply the North American operations, in combination with the Stokesdale plant.”

According to Euromonitor, the top two players—P&G and Kimberly Clark—capture most of the baby diaper marketshare, around 75-76%, while private labels make up 16-18% of the market. “Others,” which used to account for 1-2% of the market five years back now holds 3-4% of the market share, according to the market researcher’s preliminary numbers for 2022. “Others” includes brands like Hello Bello, Dyper, Kudos, First Quality, Bambo Nature and Rascal + Friends, etc. 

“While these brands are considered ‘Other,’ they have gained share from private labels and the leading national brands,” Jagadev observes.

Hanna adds that the smaller independent brands have loyal followers who primarily buy online as well as a few major brick and mortar retailers. While these independent brands tend to be premium priced diapers, most of their consumers have high to middle incomes and can afford the higher prices, although current economic trends may slow their growth rates, she comments.

While these independent brands have not yet made a significant impact on market share in the category, they have influenced the way both large and small companies design and market their products.

“Smaller independent brands like Honest and Hello Bello have long since established the benchmark in design and innovation for the rest of the players,” says Natalia Richer, diaper and absorbent hygiene products consultant, Diaper Testing International. “When Honest launched in 2012, [it] was first-of-its kind in focusing on a premium market, elevated sustainability claims and social-media-worthy patterns and customization. As Honest and a few other brands paved the road in the new premium space, they enjoyed free reign for a few years as it wasn’t until 2019 when P&G responded to this new demand with their own premium diaper line Pampers Pure.”

Although the volumes of the small boutique brands such as Dyper and Coterie are but a small fraction of the market, Richer says they are highly aspirational brands and the rest of the industry including raw material suppliers, converters and product developers look to them in defining the next step in innovation powered by heightened sensitivity to new consumer needs.   

Diaper Developments

In recent years, innovation in the baby diaper market has concentrated on skin comfort, leak protection and innovative core designs as well as the push for more sustainable ingredients. Interest in diaper pants is also growing, according to diaper industry experts.

From Richer’s point of view, the largest opportunities in mature markets can be defined as: opportunity for increased sustainability, elevated diapering experience and better fitting materials for ease of use and leakage protection. “Until a true solution for responsible disposal and recovery of diapers exists, sustainability claims are limited to marginal improvements in supply chain such as plastic sourced from renewable materials, increased plant-based components across diaper layers, and other improvements such as green conversion energy,” she says.

When it comes to “elevating the diapering experience,” she means improving the visuals and haptics of the products and refining the shopping and unboxing experience.

Diaper Testing International has also seen an increase in elastic components used in diaper design, as well as an increase in sales for pants versus traditional diapers. “In mature markets there is still an opportunity to steer consumers towards diaper pants, cannibalizing traditional diaper sales,” she adds.

Despite only being a small part of total diaper market sales, disposable pants are gaining acceptance, and will account for nearly 70% of the overall category in absolute value in the coming five years, according to Jagadev of Euromonitor.  

“The pants format, despite its higher price, is gaining traction and most of the opportunities lie here as parents opt for earlier potty training and seek products better at preventing bedwetting,” she says. “In the U.S. manufacturers of disposable pants have increased innovation to reinforce comfort with a fun and aesthetic twist.”

Also, she adds, consumers in the U.S. are slowly shifting towards exclusively associating pants with training, something that they use very briefly just during the potty training period to instead see that this is a product that can properly support their baby’s needs much earlier than the potty training.

An example of this is the enhanced version of Huggies Pull-Ups that launched in 2021. After receiving parent feedback and conducting extensive market research, the upgraded Pull-Ups are intended to make potty training fun, fast and easy with new Disney music-themed graphics that fade when wet to help teach kids to stay dry. Additionally, with the updated musical fading graphics, Pull-Ups feature a short story on the pack that parents can read to their child to help motivate them and make potty training fun.

In addition to more interest and activity in baby diaper pant designs, Hanna says most of the key trends influencing design are related to efforts to make diapers more sustainable and/or free from substances that consumers have been told to avoid.

First Quality has recently responded to this trend. In July the company launched Earth + Eden Sensitive diapers with a renewed focus on eco-conscious design made safe and luxurious.

“Over the last decade, sustainability and ingredient transparency have become more important to consumers,” says Delafraz. “They want diapers that are not only better for baby but also the environment. They’re also increasingly selective about what they don’t want to have in a diaper, hence why Earth + Eden Sensitive diapers are free from lotions, natural-rubber latex, fragrance and elemental chlorine bleaching, and use only non-toxic, water-based inks.”

Earth + Eden Sensitive diapers’ super-absorbent core is made with plant-based materials, and it only uses fluff that is certified by the Sustainable Forestry Initiative. The diapers have a cotton enhanced layer that is exceptionally soft for ultimate comfort. They also feature an enhanced waistband for a better fit and less mess. The breathable outer cover and hypoallergenic inner liner work together to keep babies dry, while Comfort-Cuffs around the legs help prevent red marks and irritation. Earth + Eden Sensitive diapers are also accredited by the Skin Health Alliance, certifying that they have been independently tested for skin safety, efficacy and quality.

“Our company motto is ‘Make Things Better,’ and it’s truly what drives us,” says Delafraz. “In launching Earth + Eden, we aimed to create a wellness brand to help empower people who want to live clean, healthy lifestyles without sacrificing product performance. Building on what people already loved about Earth + Eden Sensitive diapers, we are now delivering even more of the eco-conscious and skin-safe qualities that parents are seeking in a luxuriously soft diaper that offers excellent protection.”

Currently, the outside packaging of Earth + Eden diapers is 100% recyclable cardboard and the plastic inserts are made from 20% post-consumer recycled materials. First Quality has a goal to achieve 100% plastic-free packaging soon. To achieve this, it is developing a durable, recyclable paper insert to replace the plastic insert, and it has already trialed this solution in limited quantities, according to Delafraz. First Quality is planning to launch the new solution sometime this year.

Meanwhile, Babyganics is also answering the call for “less is more” when it comes to baby diaper ingredients. In August the company launched Triple Dry Diapers, the brand’s most absorbent diaper. The diapers feature vibrant and quirky designs that include cheerful shapes, colors, patterns and supportive messages for parents to brighten their day (or night).

The new diapers – which come in newborn through size six – are two times faster at absorbing wetness. The Triple Dry Diaper protection comes from the U-shaped channel which quickly whisks wetness away from baby’s bottom, an absorbent core which locks moisture away and a breathable layer that circulates air to skin.

The diapers feature a blend of plant-derived and traditional materials that provide a soft cloth-like feel inside and out. The brand has also included a touch of NeoNourish Seed Oil Seed Oil (a dedicated diaper blend of tomato, sunflower, cranberry, black cumin and raspberry seed oils) on the topsheet with baby’s skin in mind. Strong tabs and stretchy wings for a secured fit and an ultra-thin flexible core mean babies are comfortable when on the move. The diapers were designed with TCF (Totally Chlorine-Free) fluff pulp, are non-allergenic, dermatologist-tested, and made without latex, petroleum-based lotions or fragrances.

Market Expansion

While most of the smaller independent baby diaper brands kicked off online through direct-to-consumer channels, more of them have successfully turned to omni-channel strategies for wider consumer reach and have been increasingly expanding into larger retail stores—both in brick and mortar and online.

In fact, both The Honest Company and Dyper launched into one of the world’s largest retailers this year—Walmart.

Honest’s diapers, wipes and other body care products debuted on Walmart.com in July and later became available in the corporation’s brick and mortar stores in the fall. The widespread distribution at Walmart will allow Honest to expand its accessibility to existing and new consumers, providing a convenient shopping experience with additional ways to shop Honest products online and in-store.

Meanwhile, Dyper announced in September that its plant-based baby diapers and wipes were available in most Walmart U.S. stores and online at Walmart.com.

“As a father of three, making responsible diapering accessible and convenient to all families has been on my mind from the day I started this business,” says Radovcic. “Collaborating with Walmart is a major milestone in our quest to provide a viable alternative to conventional diapers and wipes that don’t sacrifice performance or functionality at an everyday low price.”

Walmart’s scale allows these high-performing diapers and wipes to be offered at their most competitive prices ever, according to Dyper.

During the first half of last year, the company expanded into Thrive Market, an online marketplace, as well as select Whole Foods Market retail locations, marking the first time Dyper products were available in brick and mortar retail stores.

Meanwhile, Parasol, which first launched its line of premium baby diapers in 2016, recently debuted in buybuy Baby stores. This came as a positive surprise to its CEO and co-founder Jessica Hung. “I have always been impressed with buybuy Baby’s loyal support of woman-owned, entrepreneurial businesses, many founded by mothers like myself determined to create a better way for our children. That buybuy Baby — the industry’s most discerning product expert — has chosen to share Parasol diapers, diaper pants and baby wipes with their loyal customers is not only tremendous validation of the excellence of our products, but importantly, it’s recognition of our shared dedication to continually improving family life and babies’ happiness and well-being,” she says.

Parasol has also garnered international interest and is set to launch in Taiwan next month.

Parasol diapers’ unique RashShield design is the result of its co-founder’s relentless pursuit to create the first and only rash-free diaper. Conceived with love in California, Parasol sources worldwide to bring the softest, most absorbent, sustainable materials and the latest innovative engineering to babies and their families.  

Hung says there has been a high demand from Parasol subscribers to expand sizing past size 5, so this year the company plans to add size 6 for both pants and diapers. The company also plans to continue upgrading its materials to be even more luxurious, comfortable and soft. “We never rest on our success. We will continue seeking the latest technology and highest quality innovative materials,” she says.

The small player has been resilient over the last few years. From supply chain to logistics issues, to the current inflation situation, Hung is relieved to have survived the challenges during the Covid pandemic. “We’re still here, and we are committed to ensuring our products give parents the peace of mind that they are doing the best possible for their babies,” she says.

New Life After Use

Creating more sustainable end of life solutions has been a key focus of the diaper industry, and in recent years many companies have created some practical solutions as an alternative to landfilling.

Ontex Group NV continues to provide recyclable diapers to support Woosh, a Belgian startup that aims to make diaper recycling a reality in Ontex’ home country of Belgium. Ontex helped launch the startup and continues to support the company with products and expertise as it grows.

Woosh now delivers recyclable, disposable diapers and collects used diapers from more than 200 day care centers in Belgium, which together care for more than 5200 children and plans to expand the service to more than 1000 day care centers by 2024. Together with waste companies Woosh aims to set up the first diaper recycling facility in Belgium.

Although Ontex does not have the ambition to invest in recycling plants, it will actively support partnerships with other companies and governments, according to an Ontex spokesperson.

Ontex has also participated in a program to test industrial scale composting of diaper pads with circular economy company Les Alchimistes in France since 2021. The trial has provided Ontex with useful insights into consumer preferences and behavior that it can use to further explore composting options supported by governments such as the French Ministry for Ecological Change, the spokesperson says.

In Australia, Huggies maker Kimberly-Clark announced a new diaper recycling trial that could be Australia’s answer to the 1.5 billion disposable diapers that end up in landfill each year.

The Nappy Loop has been underway in South Australia since July and uses anaerobic digestion to turn the organic materials in used Huggies nappies into nutrient-rich compost, as well as bioenergy that is captured and used to power the recycling process.

The Nappy Loop team is being led by Kimberly-Clark Australia, along with Australia’s national science agency, CSIRO, one of South Australia’s largest composters, Peats Soils and Garden Supplies, Solo Resource Recovery, and early learning and care provider G8 Education. Together, the team has collected and recycled almost two tons of used Huggies diapers, proving that anaerobic digestion is a viable option for the recycling process.

“Families and day care centers across the country rely on the convenience and performance of disposable nappies and while we work to innovate and create more sustainable products, recycling is one solution for disposable nappy waste,” says Kimberly-Clark ANZ managing director Belinda Driscoll. “Identifying a recycling solution that works hasn’t been easy due to the availability of technology and collection systems. Today is a very proud day for us, announcing that we have trialed right here in Australia, and it represents a big step in Kimberly-Clark ANZ’s sustainability strategy.”

The Nappy Loop trial has adopted a B2B model, with Solo collecting used Huggies nappies from G8 Education’s Welly Road Early Learning Centre in Mount Barker and delivering them to the Peats composting facility for processing. Utilizing anaerobic digestion, the organic material in the used nappies is transformed into nutrient-rich compost while the plastic components are separated and evaluated for future recycled products. In addition, the anaerobic digestion process creates bioenergy which is captured and used to power the Peats composting facility.

After five months of recycling used nappies, The Nappy Loop team is now exploring the opportunity to scale the program in South Australia and nationally. This includes partnering with APR Plastics to test the recycling of the recovered plastic from the nappies using pyrolysis, with the aim of having results available in early 2023.

Meanwhile, in Japan, Daio Paper and Livedo Corporation are collaborating to develop recycling technology that will repurpose pulp and other materials to make new diapers. Through technology developed by Total Care Systems, the pulp, plastics and the superabsorbent polymers are separated from used diapers. Daio has been working with Total Care, a Japanese recycling specialist, since 2005 but earlier methods used the plastic and SAP waste to make fuel and the pulp to make building materials. Daio Paper and Livedo Corporation are refining the process to reuse the materials specifically for diapers.

To promote the recycling of used disposable diapers, the companies are cooperating with local governments, hospitals and welfare facilities, for collection. Additionally, the company is developing a commercialization plan with a view to the construction of a new recycling processing plant.

Daio Paper plans to produce fluff pulp used for absorbent articles such as disposable diapers at its Mishima Mill in Shikoku Chuo City, Japan, starting in July 2023, and will produce pulp recycled from used disposable diapers in-house. By blending it with fluff pulp, the company will promote horizontal recycling into absorbent products such as disposable diapers instead of raw materials for building materials. 

Through this research, Daio and Livedo plan to recycle 6000 tons of used disposable diapers annually and reduce CO2 emissions by approximately 1940 tons annually.

Dyper, meanwhile, is transitioning its Redyper program from a composting solution to using biochar technology.

With Dyper’s Byochar technology, the company is entering the biochar economy by turning soiled diapers into biochar. Biochar is a carbon-rich product created through a heating process called pyrolysis, which allows for waste to be transformed into a reusable commodity that can improve soil, assist in air and water purification, and be an additive to paints and inks for improved pigment.

“Dyper is constantly looking to expand and innovate in the product, packaging and responsible disposal space,” says Radovcic. “When it comes to responsible disposal and driving meaningful reduction of landfill waste, we had originally started our journey by introducing our Redyper program utilizing composting, fully aware of the inherent difficulties of doing it at scale. However, given the urgency of the issue at hand and in the absence of a more-scalable, breakthrough technology solution, we wanted to get things started while initiating a broad-based research program with the objective to identify the next generation of diaper disposal technology at the same time.”

To date, Dyper’s landfill avoidance program Redyper has diverted more than 11.5 million pounds of waste from landfills, turning used diapers and wipes into nutrient-rich topsoil that is used in large-scale landscaping, roadside plantation, and growing sod. With the new Byochar innovation, the company will bring modular disposal technology to complement and eventually replace composting closer to the consumers, reducing processing and transfer times. “When in place, we will be able to reduce landfill waste and lessen overall global greenhouse gas emissions by transforming something as environmentally hazardous as a used diaper into something that can ultimately have a carbon-neutral footprint on the planet, without the use of offsets,” says Radovcic.

Redyper currently composts diaper waste to create beneficial topsoil. According to Dyper, Byochar will reduce the processing time from several months to minutes. Another benefit to the transition is that an efficient Byochar reactor needs less space and electricity than a traditional composting facility. Additionally, Byochar reactors have the capacity to process two tons of diapers per day; that’s approximately 7,200 diapers every 10 hours, or 12 diapers a minute. Further, converting Dyper diapers and wipes to biochar yields an 80% reduction in mass. For example, 100 pounds of dry diapers yields approximately 20 pounds of biochar.

Debuting in 2023, Byochar reactors will be in select markets.