Diaper wars: Kimberly to take on P&G through innovation, higher ad spend
By Devika Krishna Kumar
(Reuters) - Kimberly-Clark Corp (KMB.N: Quote) is set to increase advertising and promotional spending for its diapers and launch new products in an escalating war with bigger rival Procter and Gamble Co PG.N in North America.
Industry analysts say moms are either going upscale and choosing Pampers or going down-market with Luvs, both P&G brands, leaving Kimberly-Clark's mid-tier Huggies Snug & Dry line without a real identity.
To compete better, Kimberly-Clark said on Friday it would cut prices and "improve" its Snug & Dry line starting this quarter, without giving details.
Huggies is the core of Kimberly-Clark's baby care products business, which generates about $7 billion in annual sales. Pampers, P&G's largest brand, alone has sales of over $10 billion.
"The consumer is shifting downward in price and they (Kimberly-Clark) don't have a lower-priced product," Sanford Bernstein analyst Ali Dibadj told Reuters.
Dibadj said the company could play either end of the price spectrum: introduce a lower-priced brand or "a product that is of such high quality that people are willing to pay more for it."
P&G and Kimberly-Clark control about 80 percent of the U.S diaper market, but the Kleenex maker is losing share, according to Euromonitor International data. Huggies' U.S. market share dropped to 8.50 percent in 2013 from 10.2 percent in 2008.
Indeed, weakening sales of Huggies and other core products in North America is expected to lead to fall in sales in 2015, Kimberly-Clark said on Friday. Its shares fell 6 percent. Continued...