Nappy manufacturers shift focus in China from infants to elderly

China is poised to pass one of the great but discreetly discussed demographic inflection points, as nappy producers start prioritising the rising army of active seniors over dwindling ranks of infants.

The expected crossover, which affects marketing and manufacturing investments for some of the world’s biggest consumer products groups, comes as forecasts predict that China’s population of people older than 65 will hit 365m by 2050 — equivalent to the world’s fifth-largest country.

Nappy producers, analysts and investors have said that the Chinese market for adult diapers could exceed infant products by 2025, underscoring the swift pace of the demographic and societal transition.

Jun Kato, an analyst at CLSA, said the crossover moment “could be earlier”, given the adult segment’s fast growth rate compared with infants, which is “barely growing”.

This trend in the world’s most populous country mirrors changes seen in Japan a decade ago, when infant diapers started to be outsold by those for adults.

In 30 years, one in four Chinese people will be elderly, compared with one out of 10 in 2020, according to research from Natixis, the French bank.

International investors are also fighting to capture a share of China’s elderly industry, with private equity groups jostling for Chinese sellers of burial plots and funeral services.

China adult incontinence market forecast — CLSA

In response to this demographic change, Unicharm, one of the top sellers of nappies and hygiene products in China, has in recent months made a tacit shift in its marketing, according to analysts and investors.

The Tokyo-based company is for the first time devoting more of its marketing budget to adult diapers than ones for babies, people close to the company told the Financial Times.

“You are switching from marketing to consumers who can’t actually speak, to consumers who don’t like to talk about the product,” said another Tokyo-based consumer products analyst.

Unicharm declined to confirm the switch in its advertising budget, but a spokesperson said that compared with its previous promotional policies it was no longer investing as actively in the Chinese baby nappy market.

The spokesperson added that since last year the earnings from its highly profitable feminine care business in China were being invested in adult diaper promotion.

A worker on a nappy production line in Jinhu County, China © Costfoto/Barcroft Media/Getty

CLSA predicts that within just over eight years the adult diaper market in China could be worth $16bn, from less than $1bn last year. By 2040, the market size could rise to $30bn.

At a recently opened nappy factory in Hubei, central China, a factory owner has made an early bet on the shift. His company’s new flagship products are being made for the elderly, not babies.

The business owner, who asked not to be named, said there was already “strong demand” coming from online sales made by elderly care facilities and hospitals.

A growing number of Chinese companies such as New Sensation are posing a threat to the dominant foreign nappy producers, including Unicharm.

While foreign companies have enjoyed a premium over local nappy brands for years, there are signs that the cachet might not apply to the adult diaper market.

“A lot of the trust in Japanese brands relates to the scandals related to [the] safety of domestically-produced infant formula . . . but it is now many years since [those incidents],” said Kato.

“Chinese [consumers] increasingly feel that their own brands are getting stronger. New products are discussed immediately on their release — the word gets around very quickly if the product is good.”

Additional reporting by Maiqi Ding in Beijing

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