Foreign tycoons compete to 'pamper' Vietnamese mothers

Vietnam is the country with the highest rate of children under one year old in Southeast Asia (12%) and more than twice the global average of 5%.

The Vietnamese "breastfeeding" mothers association is the largest in the region.

Increasing gender equality also means that more women are entering the workforce than ever before. Rapid urbanization and the growth of the middle class are driving the proliferation of products that make childcare more convenient, such as formula, prepared foods, and diapers.

Interestingly, in 1957, about 92% of children were taught to use the toilet by the age of 18 months, but by 2015 this number had dropped to 65% and the age had even been raised to 36 months.

According to P&S, the global diaper market is forecast to reach $52.7 billion in 2015, $76.5 billion in 2022, and grow at a CAGR of 5.5% from 2016 to 2022. Despite slowing population growth in developed countries, diaper use is still increasing in terms of per capita spending, along with a trend of investing in health care for the next generation.

And Vietnam is not out of this trend, even a potential market for many diaper manufacturers in the world from Japan, the US, Korea,... According to another research report in 2015 by Nielsen, Vietnam is the country with the highest rate of children under one year old in Southeast Asia (12%) and more than twice the global average of 5%. More than 19% of households have children aged 1-2 years old compared to the global rate of 9%.

In addition, the psychology of always choosing the best for their children of young parents in urban Vietnam is also a factor that makes the market full of potential but fiercely competitive between brands. Currently on the market there are dozens of brands of baby diapers with prices ranging from 100-500 thousand VND.

Foreign business game

Although there are many brands appearing, currently nearly 80% of the market is mainly in the hands of 3 foreign enterprises including Unicharm (through the acquisition of Diana Company) accounting for 36%, Kimberly-Clark with 28% and Procter & Gamble with 15%. These are also the leading companies in this industry in the world.

According to a Nielsen survey, the top factors for consumers choosing diapers for their babies are skin protection/good for sensitive skin (53%), followed by product value (33%), overnight dryness, comfort to wear and trusted brand.

In addition, advice from family, friends and television advertising greatly influence parents' decisions to buy goods for their children. Therefore, it is understandable that foreign enterprises with financial resources for advertising as well as production technology to satisfy the above requirements will gain a large share of the playing field.

Kantar Worldpanel once said that in the group of families with children under 3 years old in the two big cities of Hanoi and Ho Chi Minh City, each household uses an average of 58 diapers per month, with a frequency of purchase every 3 weeks. With about 1.6 million children born each year, the Vietnamese diaper market is extremely attractive to new businesses as well as encouraging old businesses to invest in consolidating their positions.

After acquiring Diana in 2011, Unicharm quickly invested in a factory in Bac Ninh, increasing the capacity of baby diapers to 250 million pieces/year and adult diapers to 65 million pieces/year. Not willing to give up, Procter & Gamble invested 80 million USD to expand the Pampers factory in 2012.

Not only investing heavily in television advertising, these three foreign companies also spend a lot of money on free samples of gifts through online channels, prenatal classes for pregnant women, and large maternity hospitals.

Although most of the market is in the hands of foreign companies, it does not mean that Vietnamese companies have no chance. The diaper brand Bino of KyVy company, established in 2001, is still quietly surviving.

KyVy's approach is to choose the affordable segment with a price of just over 100 thousand VND, targeting the majority of low-income consumers. In 2003, KyVy invested in producing adult diapers, a product that up to this point was only focused on by Diana. In 2012, KyVy continued to innovate by launching the Mommy maternity pad product. The company's products are even exported to countries such as Cambodia, Thailand, Malaysia, Indonesia, etc.

Despite certain achievements, information about KyVy is quite scarce for most consumers, so it cannot take advantage of the support for Vietnamese products. In addition, the entry of many new foreign brands such as Merries, Goon, ... makes the existence of this Vietnamese brand increasingly fragile.

Are parents about to spend more money on milk for their children?

According to Tri Thuc Tre