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Growth Outlook for Disposable Hygiene in Southeast Asia and China

4/8/2022
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The global retail disposable hygiene market was valued at USD112 billion in 2021, and is expected to reach USD129 billion by 2026. Asia Pacific contributes over 40% to global retail sales. Evolving hygiene standards, growing consumer awareness, increasing purchasing power, innovation, and improved product availability are supporting the positive sales performance in the region. 

imagewse04.pngSource: Euromonitor International

Within the Asia Pacific region, China and Southeast Asia (SEA) collectively account for over 70% of sales, with China bringing in the lion’s share. In 2021, China accounted for USD28 billion in retail sales, while SEA accounted for USD6 billion, with Indonesia and Vietnam as the engines for growth in SEA.

Declining birth rates across the region challenge long-term growth prospects in nappies/diapers/pants 

Nappies/diapers/pants is among the largest contributors to retail disposable hygiene sales in Asia Pacific. However, demographic headwinds have curtailed growth in the category, as markets across the region are being challenged by declining birth rates. Indonesia, the country with the largest population in SEA, saw its birth rate come down to 17 births per 1,000 in 2021, down from 18.8 five years ago. China’s birth rate dropped to 8 births per 1,000, down from 13 five years ago, representing a drop of over 11 million in the number of children aged 0-4. By 2026, the Chinese population that uses nappies/diapers/pants is estimated to be about two thirds of what it was back in 2016.

A combination of family planning policies, changing social attitudes about family and marriage, increasing levels of education and rising labour force participation among women are some of the key factors leading to the declining birth rates in the region. In May 2021, China announced a three-child policy, to reverse the trend of an ageing population. It is still unclear whether the new policy will have a significant impact on the population. The country’s two-child policy, introduced in early 2016, failed to generate a sustained upsurge in new births.

Despite a contracting consumer base, retail sales of nappies/diapers/pants in the region are still expected to see growth over the next five years, with disposable pants driving this increase. Given the still low per capita consumption compared with developed countries, there is room for organic growth. The pants format, despite higher pricing, is showing healthy demand owing to convenience and durability. Pants is increasingly becoming the preferred format among parents as it helps support toilet training and fosters a greater sense of independence. Manufacturers are also responding with new product developments. In Indonesia, for instance, leading player Softex (now owned by Kimberly-Clark) introduced All-New Sweety Gold Pants NextGen in 2021, which promotes freedom of movement for babies. 

With still low per capita consumption and a significant untapped consumer base in the region, the industry has an opportunity to drive further market penetration through retail expansion, product innovation, and attractive pricing strategies. However, while innovation in the premium segment through more sophisticated value-added products and the pants format can help value growth in the category, affordable pricing strategies will remain crucial to wider product adoption. 

Innovation and education are key to driving growth in sanitary protection

Sanitary protection is the largest contributor to retail disposable hygiene sales in Asia Pacific in both value and volume terms. In SEA, where the female population aged 12-54 is expected to reach 189 million by 2026, this category is projected to grow at a CAGR of 5% between 2022 and 2026, to reach USD1.9 billion. In China, on the other hand, sanitary protection faces a number of challenges, including already high per capita consumption of towels (pads) – the preferred format – and the ageing demographic. Therefore, the category is expected to see only modest growth ahead, chiefly led by trading up and premiumisation.

Improving disposable incomes among women, as well as ongoing educational efforts by governments and non-profit agencies to address feminine health and hygiene, have been helping to drive retail growth, along with industry innovation. 

Innovation efforts in the category are centred around product functionality and value-added features. In Indonesia, for instance, the leading player Softex launched a number of value-added products over the last couple of years, including Softex Celana Menstruasi – sanitary towels in pants format. The success of this format prompted other leading players to introduce similar products, such as Unicharm’s Charm Sleep Protect Panties. In China, category leader Sofy launched a new hybrid product in 2020, which uses proprietary Japanese technology and incorporates a body warming function in the sanitary towel, which extends to the lower abdomen for added comfort. This kind of innovation, however, comes with a higher price tag and can limit growth prospects to higher-income consumer groups. 

Over the years, the region has also seen growing concern around the waste generated by feminine hygiene products and the need for more sustainable alternatives. Euromonitor International’s Voice of the Consumer: Health and Nutrition survey in 2021 revealed that 21% of respondents across China, Indonesia and Thailand have turned to reusable underwear, while 8% use reusable pads. While cost can be a consideration for turning to reusable products, more consumers are also looking for environmentally-sustainable options. In Vietnam, the local Vietnamese brand Green Lady Vietnam offers reusable sanitary protection products targeted towards young environmentally-conscious consumers. Also, Chinese lingerie brand NEIWAI and Uniqlo launched washable underwear as an alternative to disposable products. Even though retail sales of these products remain small compared with disposable products, reusable alternatives have been gaining traction. This trend poses both challenges and opportunities for brands in disposable sanitary protection to address the issue of sustainability through innovative products and packaging that will appeal to the eco-friendly consumer segment.

While innovation in terms of functionality, material, format and value-added benefits will remain among the drivers of growth in SEA and China, brands will need to find a balance between quality and pricing to draw more users from the vast low-income consumer base, which constitutes the main proportion of the untapped consumer base. 

Ageing population benefits retail adult incontinence

While still small in absolute value, retail adult incontinence is the most dynamic disposable hygiene category in Asia Pacific, registering upper single-digit growth in 2021. While SEA and China are deemed to be relatively young compared with developed markets such as Japan, the evolving demographic landscape and the growing number of elderly people provide a significant customer base to secure category growth.

In 2021, retail adult incontinence sales in SEA totalled USD429 million, with a projected value CAGR of 15% over 2021-2026. Indonesia is a primarily contributor to growth in the SEA region. While the country’s share of the population aged 65+ is not as significant as in countries such as Singapore or Thailand, the substantially larger population base in absolute terms creates abundant opportunities for organic growth. On the other hand, China ranks second in market size across the Asia Pacific region, after Japan, with retail sales of USD972 million in 2021. By 2026, China is expected to top the Asia Pacific ranking, with retail sales increasing by an 18% CAGR over 2021-2026. The increasing penetration of retail disposable adult incontinence products in the country will be driven, among other factors, by the largest number of elderly people in the world.

Table 2: % Share of population aged 65+, 2000-2040imagesw244.pngSource: Euromonitor International from official sources

However, demographic shifts are not the only factor to consider when thinking about growth strategies for retail adult incontinence. Consumer awareness, social stigma and affordability remain among the key barriers to higher penetration in the region. These factors also often restrict the category to product formats designed for moderate/heavy incontinence, such as adult nappies/diapers, which are typically seen as more cost-efficient by consumers. Euromonitor International’s Voice of the Consumer, Health & Nutrition survey in 2021 revealed that adult nappies/diapers remains the leading format used by consumers in China and Thailand, with 46% of respondents reporting their use in China and 31% in Thailand.

Cost is also among the factors behind the high usage of reusable adult incontinence products. The 2021 Voice of the Consumer, Health & Nutrition survey revealed that in China 42% of respondents indicated the use of reusable adult incontinence products, in Indonesia – 38%, and in Thailand – 19%. The survey also revealed a high proportion of respondents who use sanitary protection products for adult incontinence protection – at over 30% of respondents in China, Indonesia and Thailand. These findings are indicative of further opportunities to drive the use of specialised disposable adult incontinence products through higher product awareness, innovation and better access.

Innovation in adult incontinence across the region has been evolving around product functionality (e.g., breathability and absorbency), as well as thinness and discretion to address concerns related to social stigma. In Indonesia, Softex launched Confidence Adult Pants, touting a discreet cut and style, as well as “Flexible Move Tech” that allows for more movement flexibility while also being discreet. Furthermore, in China Kimberly-Clark introduced the Poise brand in 2021, marketed primarily to Chinese women with light incontinence. Hangzhou Coco Healthcare also launched incontinence products targeting women, expanding its incontinence product line. 

Preventative hygiene practices remain on the agenda and support demand for wipes

Wipes benefited the most from the pandemic in 2020, but the pace of growth decelerated in 2021 as demand normalised. However, in per capita terms, wipes usage remained above the pre-pandemic level. In value terms, SEA and China expect healthy growth to continue, with value CAGRs of 11% and 8% over 2021-2026 respectively. Improving incomes, increased awareness of wipes, innovation, and the rise of e-commerce will be positive drivers of demand and sales.

In terms of new product development, while antibacterial properties remain a popular feature and the focus of innovation, other product claims include natural, hypoallergenic, water-based, skin benefits and biodegradable. Recyclable packaging has also become more notable as the industry seeks to meet sustainability goals.

Significant unmet potential amplifies opportunities in Southeast Asia and China

Over the next five years, China and SEA are expected to see growth in sales of retail disposable hygiene products, contributing close to 85% of absolute growth in the Asia Pacific region. While the changing demographic landscape might present a growing challenge to the organic growth of nappies/diapers/pants, increased consumer awareness of disposable hygiene products, improved affordability, habit persistence and product innovation will help drive growth, especially in view of still significant unmet potential in the region. It is, however, also necessary to acknowledge economic and cultural nuances within each market in Southeast Asia and China in order to successfully address the needs and demands of local consumers.

Read more in our article, Megatrends: Wellness - Mapping Key Opportunities in Asia Pacific

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