'Pee points' are among P&G's strategies in diaper wars
The cheerful, teal room packed with babies and watchful grownups could be a daycare center anywhere in America except for the lab-coated researchers sticking plastic tubes into toddlers' diapers.
This is Procter & Gamble's baby-care research center at the Winton Hill complex north of the company's Cincinnati headquarters, one of five similar facilities around the world. Here researchers are pushing the boundaries of diaper science and style. In this experiment, they're injecting warm saline at precise "pee points" in the diaper, which differ for boys and girls, and then weighing the nappy to determine absorbency.
The research is designed to protect the Pampers brand, P&G's biggest, and maintain a technological edge over generic diaper makers and Kimberly-Clark's Huggies. P&G is constantly seeking new ways to extend a brand that generated more than $10 billion in sales last fiscal year, or about 12 percent of revenue.
"We're trying to build a diaper that is zero leakage, ultimate dryness, ultimate comfort, with an underwear-like fit," said Al Maingot, who oversees baby-care research from Singapore.
While birth rates have slowed in the U.S., developing markets in Asia and Latin America are generating millions of new baby bottoms a year. Only 11 percent of total diaper sales came from the U.S. last year, according to Euromonitor, and through 2018 the firm forecasts 7.5 percent sales growth there, compared with 44.8 percent in the Asia-Pacific region.
The disposable diaper has come a long way since 1961, when it was created by a P&G engineer tired of cleaning his grandson's cloth nappies. The company replaced pins with tape fasteners in the 1970s and added absorbent gel in 1986. In 2010, P&G introduced Dry Max Pampers, dubbed the biggest diaper innovation in 25 years because they were 20 percent thinner and twice as absorbent as before. It's nothing like the bulging packages of yesteryear, more like a pair of padded underwear.
For all of P&G's advances, branded diapers have lost ground in the U.S. to generic brands, often sold at a discount.
Private-label diaper share, which includes brands from Target and Kroger, has marched upward in the past decade, to 18.6 percent last year, according to researcher Euromonitor International. Although its share has declined, Huggies has been the leading brand in North America over the past decade, followed by Pampers. P&G has the leading market share when you combine Pampers and its Luvs brand.
"It's a very, very competitive category," said Donny Chi, an analyst with Euromonitor in Chicago.
Competition from rivals is hardly P&G's only challenge. Parents can be finicky customers, especially if they believe the latest version of Pampers isn't as good as the last or may be hurting their child. Not long after Dry Max diapers went on sale, parents convinced that they were causing rashes and chemical burns took to blogs and Facebook demanding that P&G recall them. The company denied the claims, and U.S. regulators eventually declared the diapers safe.
The Pampers brand is critical for P&G because it connects the larger company to moms, the "core consumer," said Virginia Morris of Daymon Worldwide, a product-development and brand consulting firm based in Stamford, Conn. If moms are happy with their babies' nappies, the halo effect may benefit P&G's other products, Morris said.
P&G's operating profit for baby and family care was 20.9 percent last year, compared with 17.6 percent for fabric and home care, according to company filings.
So P&G is constantly souping up nappies with softer fabrics, snugger leg bands and sleeker shapes to persuade parents to pay up. Since the recession, P&G has managed to hold onto its 35 percent global market share and raise prices.
"If they don't stay ahead, they're going to become commoditized," Morris said.
P&G and Kimberly-Clark continue to the lead the industry in the U.S., Morris said, because many parents would rather pay the brand premium than take a chance on generic diapers.
P&G's breadth of products and categories gives it an advantage over rivals because divisions borrow technology from each other. Pampers use mesh found in feminine-care products, while the disposable absorbent fabric used in Pampers has showed up in the Swiffer line of mops.
Each year, North American researchers conduct more than two dozen studies, interview 9,000 mothers and log hundreds of hours of interviews and baby-center observations. This fall 200 parents took home a month's supply of Pampers and kept logs on how long their babies wore them without complaint. They returned piles of soiled nappies to the lab, where they were frozen and then weighed to see how much liquid they'd absorbed.
Researchers watch how babies move, sit and fall. They measure urine's "gush volume" and drop metal weights on wet and soiled diapers to see how they stand up. They make adjustments constantly. Newborns have looser stools than older babies. So last year P&G adjusted the so-called poop zone and added absorbent material to small-size Swaddlers diapers.
P&G's baby-care division is a patent factory. About 5,000 have been granted or are pending. One is for so-called curly fibers, rotini-like strands of cellulose that wick liquid away from babies' skin faster than typical straight materials. The curly fibers, now used in all Pampers diapers, make the nappies feel drier to the touch and are more absorbent.
To make sure the fibers are consistent, Nancy Myers spends her days peering into a scanning electron microscope at a packed jumble of wavy strands magnified 20,000 times. Are the molecules the right size to let air in and keep liquid from oozing out? Are any fibers damaged? Dirty?
If there are problems, the diaper goes back to the drawing board in the company's 20,000 square-foot prototype laboratory, where workers assemble new models by hand.
If a caregiver down the hall at the baby center has a suggestion, maybe for a wider fastener or a lower leg cuff, the folks in the prototype lab will mock up a version. The lab churns out 150,000 models a year, most for diapers that won't come to market for up to a decade, and only after hundreds of iterations, said Aaron Seitz, the lab's director.
Down the hall from Myers and her microscopes, David Maltbie is watching 3-D virtual babies on a screen that runs the width of the room, checking their virtual diapers for flaws. As a faux infant pees, Maltbie monitors how the liquid disperses through the diaper. Is it leaking? Puddling somewhere? If he spots recurring problems, he reports them to the researchers.
Then it's back to the drawing board. Again.
Because babies come in so many shapes and sizes, Seitz says "fitting a diaper is like trying to fit a snowflake."