Japanese hygiene products manufacturer Unicharm has launched an ambitious expansion plan in Southeast Asia in recent years, taking risks with products deemed too sophisticated for these developing regions, building new factories and acquiring local producers to help it build share and grow sales.

Because the Asian region, offers such an aggressive population growth penetration potential, Unicharm has earmarked it as the most important growth area, and this strategy is working with sales to the Asian market reaching a record high last year.

“Our goal is to build a dominant market presence in Asia, the world’s largest market for nonwoven fabric and absorbent material products,” says Takahisa Takahara, Unicharm CEO. “This will be a key step toward achieving our vision of  becoming a leading company in the global market.

Unicharm is in the midst of a three-year medium-term management plan, during which it has stepped up efforts to expand its reach worldwide, focusing on countries with large populations. Many of these countries, like Indonesia, Thailand and Vietnam, are located in South East Asia. In these markets, Unicharm has focused on offering products priced so that the local consumer can afford them. This includes a disposable diaper in China priced 40% lower than its products for the Japanese markets.

Currently the manufacturer of Mamy Poko baby diapers, Sofy feminine hygiene products and Prevail adult incontinence items, currently holds a number three position in the global hygiene market, with an 8.6% marketshare, and a number one position in Asia, with a 27% share.  

In 2014, Asian sales reached a record high, representing about 42.8% of Unicharm’s total sales. Of these nations, Indonesian sales comprised 10%, Thailand 5%, Vietnam 3% and Taiwan 3% while Chinese sales represented 15% of the total.

“It has really been a fascinating thing to see them move out of Japan and really say that all of Asia is their market,” says hygiene industry consultant Pricie Hanna. “The strategy of bringing pants diapers into these less developed regions, even though they are considered premium products, and offering an affordable version surprised a lot of their western competitors—especially when it was a success.”

Decades in the making
Unicharm first began targeting Indonesia in 1997 when it established a joint venture there. Today, the company has dominant marketshare in both the baby care and feminine care business and the company is currently extending its sales reach in Indonesia, recently opening its third plant in the country. The plant’s location in Surabaya, East Java was chosen to give Unicharm better access to the outlying eastern islands of Indonesia. The company’s first two sites were in Jakarta.

According to Euromonitor, Unicharm led baby diaper sales in 2013, accounting for half of sales in diapers and training pants thanks to intense marketing. The company’s Mamypoko brand is promoted through television advertising and appeals to all different  groups of incomes because it is available in a variety of sizes and types. This market has been attractive because its birth rate continues to grow and Indonesian parents are seeking convenience products, leading to higher diaper penetration.

Unicharm also holds a better than 50% marketshare in the Thai baby diaper market and the company continues to focus on growing both tis baby diaper and feminine hgyieen sales in the market. Unicharm entered this market in1987 when it established a joint venture there and in June 2010 it launched Happy Pants, a move that helped grow the number of diapers used per month by Thai consumers.
Unicharm also recently launched pants type diapers to attract new users and is encouraging the use of these diapers at an early stage in India. This helped pants usage increase from 26 to 39% and represented a 100% increase in overall sales for the year. This also allowed Unicharm to take the No. 2  position, 22.6%, in the country’s diaper market.

Meanwhile, in Vietnam, where the company established a subsidiary in 2006, Unicharm holds a leading 40% share in baby care and a No. 2, 43.4% position in feminine hygiene. The company has focused on promoting the spread of standard pants type diapers and the reinforcement of high value-added products.

Unicharm’s sales have been boosted in recent years through the acquisition of Diana, a Vietnam maker of  diapers and sanitary napkins. At the time of the acquisition Unicharm said that the combination of Diana’s knowledge of the Vietnamese market and its diverse experience in the market and Unicharm’s product development capabilities would greatly benefit the Vietnamese market.
Also benefiting Unicharm’s place in Southeast Asia is the purchase of Myanmar Care Products (Mycare) in August 2013, to give it access to this fast growing country with a population of 62 million.

“Our management decision to acquire Mycare has been made on the grounds that new markets are being created and overwhelming share is further secured by accelerating the speed of brand penetration through the expansion product availability and mutual utilization of manufacturing technology and marketing know-how as a result of Mycare to become a part of the Unicharm group,” the company said in a release announcing the acquisition.

Founded in 1995, Mycare is the manufacturer of brands including Eva, the number one in the country’s feminine hygiene napkin market, and MyBaby diapers, the second largest diaper brand after Unicharm’s Mamypoko. All of these acquisitions are part of Unicahrm’s Global 20 Plan, which outlines a goal to dominate Asia through expansion into ASEAN markets.

Hanna calls that focusing on Asian growth has been a boon for Unicharm that will continue for some time. “The Asian countries have grown successfully,” she says. “Of course,  you can’t expect the double digit growth to go on forever but there is not much fear that the growth engine is going to stop any time soon.”