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Nappies are an expanding market, and not just because of babies. Demand from incontinent elders is on the up. Companies such as Kimberly-Clark, which this week announced plans to spin off its international tissues division, stand to benefit from the growth of this high-margin revenue stream.
Kimberly-Clark is best known for Huggies nappies, Kleenex tissues and Andrex loo roll. The $45bn US group also happens to be a top purveyor of bladder leakage products, holding more than 50 per cent of the US market through brands such as Depend and Plenitud.
This week it announced a plan to clean up its portfolio to focus on faster-growing and more profitable businesses. Adult care is one. Selling tissues and loo roll overseas, less so. Kimberly-Clark will therefore spin off a majority stake in its international tissues business to Brazilian pulp maker Suzano. The division is relatively small, and half as profitable as its large North American unit.
That leaves the company to focus on the lucrative business of keeping bottoms dry. Baby nappies remain Kimberly-Clark’s biggest revenue generator. The company sold more than $7bn of disposable nappies, wipes and training pants last year, amounting to more than a third of total sales.
Demographically speaking, it is not younger end users who make up the greatest opportunity. Births peaked in the US at 4.3mn in 2007 and have been in steady decline since, data from the Centers for Disease Control and Prevention shows. Frugal families are trading down to supermarket brands, switching to reusable options or potty training earlier. Sales of baby care products at Kimberly-Clark last year were lower than they were in 2022.
One perk of selling absorbent products to adults is that, unlike babies, they do not age out of the market. Demographics are, in fact, a tailwind. There are at present roughly 62mn adults aged 65 and older living in the US, accounting for 18 per cent of the population. By 2054, nearly one in four Americans will be over 65, according to the Pew Research Center.
That explains why this part of the market grew 4 per cent globally last year to $13.1bn, according to Euromonitor International, faster than other paper-based household products. By 2029, sales of adult nappies and pads are expected to be about $20bn, implying a compound annual growth rate of nearly 9 per cent over the next five years. If Kimberly-Clark seeks a new look — and it should, since its shares have gone nowhere in five years — it should start with its older customers.
