The diaper industry needs a change

The global markets for child and adult diapers, roughly $46 billion and $16.7 billion respectively, might seem static — the kind of habitual, locked-in consumer purchase that benefits big players like Procter & Gamble, maker of Pampers, and Kimberly-Clark, whose house brand is Huggies. But few products show just how much generational shifts can ripple through the wider economy.

The diaper industry has seen decades of slow but steady innovation and expansion ever since Marion Donovan, a mom from Indiana, became so exasperated with the endless cycle of soiled drawers that she invented a diaper-cover prototype made from repurposed shower curtains in the 1940s. In fact, the convenience became so popular with parents that potty training, which in Donovan’s time used to begin before 18 months, now starts closer to 36 months on average, in part thanks to the benefits of disposable diapers. Talk about a captive market.

Personal-care companies are being challenged not by a baby boom but by the graying of the globe. Whereas baby-diaper unit sales dropped 1% last year during a period of inflation and declining birth rates, adult-diaper products are forecast to grow nearly 8% a year and hit $28 billion in annual global sales by 2030. In the US, the diaper movement is indicative of the silver tsunami, a broad shift of the American population toward more aged individuals, many of whom may suffer incontinence related to pregnancy, childbirth, diabetes, or obesity, yet maintain an active social and sporting life.  

You might not notice Depends flying off the shelf, according to Fairfield Market Research Manager Ritika Khandelwal, because much of the adult-diaper growth is coming from e-commerce platforms. There is “escalating worldwide demand” for disposable products made from natural materials, Khandelwal said, as well as pull-up-style diapers. 

These changes have already taken place overseas, especially in countries grappling with cratering fertility rates. In March, Japanese manufacturer Oji Holdings announced it would stop selling baby diapers in its own country, going adult-only in Japan while selling child diapers in other Asian nations. The growing adult market is creating demand for more svelte, stylish, and less visible products. Ulrika Kolsrud, president of Sweden’s Essity health brand — maker of a low-rise, disposable underwear for adults called Silhouette Noir — said that "if incontinence was a country, it would be the third-largest country in the world."

This rise in demand has challenged manufacturers to keep up. One key issue is the astronomical cost of adding new production lines. A machine that makes just one size of diapers costs roughly $4 million, which Pricie Hanna, managing partner of Price Hanna Consultants and industry expert, said has been making it tough for new entrants in the industry. They may master marketing, but they’re usually stuck cobbling together contract manufacturing options as they scale. 

Preparing production plants and marketing plans for this demographic shift remains a challenge. While sales of adult-incontinence products — don’t you dare call them diapers — have been growing steadily for years, they’re made on different machines than smaller baby diapers, requiring a delicate balance when it comes to shifting production lines. In addition to traditional problems like leakage and skin irritation, there’s also fitting and sizing to consider and the need to maintain discretion under clothing, a much more complex puzzle than making diapers for toddlers. Supply chains, industrial infrastructure, and changing consumer preference can make something as mundane as nappies a difficult market to break into and succeed in. 

There’s also high dependence on specific raw materials like superabsorbent polymers, fluff pulp, and nonwoven fabrics, a shortage of which can lead to disrupted supply chains, Khandelwal said. 

Diapers for babies have had their share of challenges as well. In 2021, a winter storm that wrecked the Texas and Louisiana chemicals industry led to a shortage of acrylic acid, a propylene-based compound that gives diapers absorbency. Previously, Asian markets had sent excess supplies of the chemical to the US — low birth rates mean low diaper demand — but the pandemic-era upheaval of supply-chain shifts and starts sent prices and delivery times soaring. 

While chemical availability has returned to normalcy, the cost of diapers still weighs on many families. Nearly half of families with kids struggle to pay for disposable diapers, according to a study by the National Diaper Bank Network, an expense that can run more than $1,000 a year. Nearly 20% of respondents said they delayed a mortgage or rent payment to help pay for diapers, and a quarter had to skip work or school because they lacked sufficient diapers to send to day care with their child. The US has more than 225 diaper banks that provide access for children in need.

On the other end of the socioeconomic spectrum, a growing subsector of premium, sustainability-focused diaper brands have tried to make inroads with high-income parents. Coterie, Parasol, Dyper, Kudos, Freestyle, and others combine alternative materials with sustainability features, like composting services. They also nod to consumerism-as-change social benefits, like funding carbon offsets or providing masks for frontline health workers. 

One of the most prominent of such companies was Hello Bello, founded by celeb actor couple Kristen Bell and Dax Shepard in 2019. They secured a multimillion-dollar investment to modernize an old diaper plant in Waco, TX, as well as deals to distribute in Walmart and CVS. But the brand’s star power and sustainable vision couldn’t overcome supply-chain and inflation challenges; this past fall, it filed for bankruptcy, citing shipping costs, delays, and material prices. Before its new factory could come online and cut costs, it saw contract manufacturing eat into its bottom line: manufacturing prices rose 18%, while Walmart and Amazon, its main retail channels, capped price increases at 10%. 

Colin Hanna, of Price Hanna Consultants, doesn’t see a similar supply-chain problem in baby diapers — growth is steady. But, like with adult products, the current system makes it harder for startups to reach scale. Recent entrants to the adult market include Because, which says it offers better fits (“not the leaky, creaky, bulky pads our grandparents used”); Attn: Grace, which seeks to stand out with a sustainable, skin-safe line; and Willow, which was designed by a machine-learning specialist. 

More brands, and increased production, will soon be needed. Analysts have been watching expansion in the adult market and expect, globally, that it may equal and even surpass that of the kids market in the next five years, Colin Hanna said. “That is, unless the world decides to have more babies.”

Patrick Sisson is a reporter covering cities, technology, and business.