As Americans age, P&G turns to adult diapers
Over the past 15 years, US sales of incontinence products have roughly tripled to around $1.5 billion.
Births peaked in the U.S. at 4.32 million in 2007 and declined for five years before leveling off recently. Some 3.96 million babies were born in the U.S. last year, according to preliminary data from the Centers for Diseases Control and Prevention.
The number was up slightly from 2012, but the country's fertility rate dropped to a record low of 62.9 births per 1,000 women of childbearing age. Meanwhile, over 3 million Americans are now turning 65 each year, according to the Pew Research Center.
"The flip side of the low birthrate is we're all living longer," Kimberly-Clark (KMB) Chief Executive Tom Falk told an investor conference earlier this summer. While demand for the company's Huggies training pants has been weakening, its sales of incontinence products have been growing steadily, he said.
Over the past 15 years, U.S. sales of incontinence products have roughly tripled to around $1.5 billion, according to market-research firms. Globally, sales of $7 billion are growing at a rate of around 8.4 percent annually, faster than other paper-based household products, according to Ali Dibadj of Bernstein Research. Mr. Dibadj estimates P&G should be able to garner over half a billion dollars in sales of incontinence products within a few years.
P&G, the maker Pampers and Luvs diapers, is expected to re-enter the North American market in the coming months, according to several retailers and analysts. Tom Wilson, who owns the Caregiver Partnership, a retailer of products for the elderly in Neenah, Wis., said the new P&G products may be rolled out under its Always feminine-care brand, suggesting the company will target mainly women, who make up the majority of incontinence sufferers.
As many as 25 million Americans -- or around one in 10 adults -- have some form of urinary incontinence, which can range from occasional small leaks when people cough or sneeze to a complete loss of bladder control.
Causes include pregnancy and childbirth, bodily changes that accompany aging, and a range of health conditions, according to the Mayo Clinic.
While most infants and toddlers wear diapers for two to three years, incontinence suffers typically have to buy products for much longer, as the problem seldom goes away.
The average user spends about $80 a month, said Mr. Wilson.
A P&G spokesman declined to comment.
Retiring baby boomers -- Americans born between 1946 and 1964 -- are driving a surge in the U.S. population age 65 and older, which is expected to nearly double from 2012 levels to 83.7 million in 2050 and make up over a fifth of the country, according to the Census Bureau.
Meanwhile, five years after the end of the recession, companies that sell toys, children's clothes and infant formula are still struggling to understand why births haven't recovered along with the economy.
Economists and corporate executives have pointed to lingering unemployment, slow income growth and higher costs of living that continue to weigh on consumer-spending habits and people's decisions to expand their families.
The shift to an aging population is prompting companies to look for ways to retool their products and businesses to keep overall sales growing.
Jarden Corp., the maker of Nuk baby products, has started researching how some of the brand's orthodontic and feeding devices like pacifiers and spill-resistant sippy cups could be adapted for elderly people with special needs.
"We're looking to mine existing technologies to create new growth opportunities," said Jim Lillie, CEO of Rye, N.Y.-based Jarden.
Toy maker Hasbro (HAS) has been exploring ways to cater to the older generation after learning that some customers were buying lifelike interactive pets for their elderly parents.
The answer isn't always human. Energizer Holdings, the maker of the Diaper Genie, in 2012 began selling a similar disposal product for cat owners called the Litter Genie, a plastic bin that seals soiled cat litter in airtight bags.
While the product wasn't a direct response to the declining birthrate, executives at Energizer determined that cats presented a potentially bigger market opportunity.
Around 36 million U.S. households have cats, and owners have to clean up after them for over 10 years on average, versus the two or three years in which children typically stay in diapers.
The steps American companies are starting to take are reminiscent of what Japanese companies did when a decades-long drop in the country's birthrate and a rapidly aging and shrinking population forced them to expand into new areas to offset declines in sales of products geared toward younger consumers.
Video game maker Nintendo (NTDOY) has been marketing some of its games and gadgets like the Wii Fit to older people as ways to help them stay physically and mentally active. Another game maker, Konami Corp., diversified by acquiring fitness clubs that count seniors among their clientele. Japanese baby-food producers retooled to make soft meals for seniors.
To be sure, the U.S. population is still expanding, thanks in part to immigration. But P&G and other makers of branded household goods are facing challenges in what is still one of their most profitable markets, as frugal consumers cut back on everyday basics.
Industrywide sales of disposable baby diapers in the U.S. showed essentially no growth in 2013 from the previous year, according to Nielsen data.
Sales also were flat for feminine-care products, paper towels and toilet paper, all categories in which P&G has a large presence.
Back in the late 1970s, the Cincinnati company started selling adult-incontinence briefs under a brand called Attends, but sold the North American business two decades later because it lacked the scale P&G aims for with its brands. Around that time, market-research firms estimated Attends' share of the adult-diaper market was under 5 percent, lagging behind incontinence products made by Kimberly-Clark, whose Depend and Poise brands had about half the market.
Attends is now owned by Domtar (UFS), a Canadian pulp and paper company. P&G did maintain a small presence in the incontinence business in Europe.
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