Little diaper industry overcomes crisis with cheap items

Sao Paulo-the search for cheaper products, amid the shrinking of the Brazilian''s income comes driving the business of small and medium-sized factories of disposable diapers. Changing consumption habits must maintain competition in this sector on the rise and a two-digit growth in this and the coming years.
The prediction of market expansion, even in the midst of an economic crisis in the country, attracted investors to the Diapers Kisses, commercial Manager of the company account, Ademir Negrini. According to him, the manufacturer of the Midwest received the amount of 4,000,000 R$ of a group of investors, which helped the company to exit the process of reorganization started last year.
"With this value invested in improving the manufacturing process, with more machinery and technology, which ensured the increase of product quality. All this allows us to practice a more aggressive price, "he says.
He believes that the option of disposable diapers with reduced prices contributed to the Kisses captures new customers. "We work with a first price and in time of crisis there is migration of more expensive for other brands with lower values, as is our case," says the Executive.
According to the market intelligence specialist of Factor-Kline, Elaine Gerchon, this migration movement of brands is natural in the crisis. "The hygiene market is large and competitive. With several options, the consumer exchanges seeking to maintain the standard of quality, but with a lower price, "says she.
The Kisses designs 40% expansion in sales in 2016 compared to last year, when he won his R$ 3,200,000. "We anticipate that at least 20% of consumers who experience the brand remain buying our product even if the economy improves, because you''ll notice an advantage", bet Negrini.
In view of the commercial Director of Diapers Panda, Modest, roku''s maxim that the crisis arise the great opportunities. The company designs for this year growth of 70% on sales of 2015, the year he also joined with a process of reorganization. "It''s a great moment for us, an opportunity to achieve goals after difficult years," said Modesto.
He says that last year the Panda was forced to restructure, reducing the production capacity with workload and even layoffs. "Now, the market is more promising. We are investing more in product presentation, best packaging, enhancing communication and improve the quality of diapers, "added the Director.
Competitiveness
Experts point out that, with the advancement of small and medium-sized enterprises, the hygiene market is increasingly competitive. The advancement of new players can make life of industry giants, which owns brands, in their opinion. "If the cheapest product has been tested and meets the needs of the baby, it makes no sense to go back to more expensive brand," reinforces the head of capital markets of Eleven Financial, Adeodatus Netto.
The increased competition with low-cost products can cause a fall in the high rate of total revenue. A survey from Mintel estimates that last year the market for disposable diapers movement more than $ 7 billion, up 12% before 2014. The consultancy forecast for this year is for growth of 11%, reaching close to $ 8 billion.
The slowdown in revenue growth is also a reflection of the devaluation and rising inflation, brazilian parses the Mintel specialist, Juliana Martins. "Dollar and inflation, added to unemployment, must be the main responsible for this movement in the industry," said she, in a statement about the survey.
This perception that the year will be difficult also was recorded by Procter Gamble & (P&G), Lady of the Pampers brand. In a report of quarterly results, the company''s CEO, David Taylor, explained that were carried out investments in innovation and advertising, in order to increase the productivity of P&G. "we are committed to the improvement of productivity and costs," said Taylor.
Last year, the company earned $ 20.2 billion with sales around the world in the sector of care for family, women and babies, retraction of 3% compared to the same period in 2014.
Already the owner of the brand Huggies, Kimberly Clark, has been noticing an improvement in sales volumes of care for children in Brazil due to innovations and increased promotional activity. Last year, the company had revenue of $ 9.2 billion, 4.5% drop compared with 2014.
The CEO of brazilian Santher, Ricardo Barba, see the need to adapt to new consumption habits. "Consumers seeking the best offer and the type of packaging must correspond to it. Promotional versions have greater appeal in the hour of choice ", he noted.
Hypermarcas
Netto, the Eleven Financial adds that given this scenario, Hypermarcas, manufacturer of disposable diapers, Pompom can postpone the sale of this Division. "The company is with a very healthy and had positive results even in this segment in which no longer want to act. So, I wouldn''t be surprised if the sale were suspended or postponed, since the operation went back to being profitable and the company is not indebted ".
The unit, the sale for more than a year, was valued at 1.5 billion R$. Sought Hypermarcas was unavailable for comment.