Networks change diapers – Newspaper Kommersant No. 224 (7425) of 12/02/2022
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Retailers’ private labels (PL) began to crowd out the products of international companies, which reduced their marketing activity in Russia. Thus, the American diaper brand Pampers has lost leadership in sales in its category in a number of retail chains. However, experts believe that despite the growing popularity of private labels, such products will not be able to completely replace the products of global brands. When the economic situation changes, consumers will be able to return to buying familiar brands, even if they cost more.
Magnit’s own brands of diapers, Casper and NaNi, for the first time outstripped the American Procter & Gamble (P&G) brand Pampers in terms of sales share, Kommersant was told in the retail network. The share of sales of private label diapers, according to Magnit and Lenta, has reached 40%.
Magnit is talking about a 16% increase in the share of private labels in total diaper sales since the beginning of this year. Lenta notes a 70% increase in sales of these products under its own brand. X5 Group (Pyaterochka, Perekrestok, Chizhik) also noticed an increase in the share of private labels in the diaper category starting from spring 2022.
P&G declined to comment. In the spring, due to the military actions of the Russian Federation in Ukraine, the company announced the suspension of investments in Russian business.
According to NielsenIQ, retail diaper private labels came out on top in terms of sales in monetary terms, with a share of over 30%. The volume of sales of diapers under the networks’ own brands increased by 130% in monetary terms year-on-year, in real terms – by 60%, while in general this segment grew by 22% and 4%, respectively, the company’s analysts calculated.
In Lenta, a significant increase in the share of private label diapers is associated with a decrease in availability and a sharp increase in prices for popular international brands. The X5 Group talks about the availability of private label products on the shelves at lower prices for them.
Most private label products are made in China, and the current exchange rates contribute to a more comfortable price for such products, says Roman Kvinikadze, co-founder of NappyClub. At the same time, for example, components for the production of Pampers are supplied from Europe, with which trade relations are now difficult, the expert explains.
According to Rosstat, prices for baby diapers rose sharply in March 2022 – by 17.5%, while in January and February the growth did not exceed 0.5-1.2%. As Kommersant reported, in March, P&G announced a 47% increase in the cost of baby care products (see issue dated March 14). In April, the growth rate of prices for diapers, according to Rosstat, slowed down to 3.4%, and since June they began to decrease within the range of 0.3–0.7% monthly.
Pampers used to edge out competitors with huge promotional budgets, but this year the brand has had to drastically cut marketing costs, Mr. Kvinikadze says. Sales of diapers from the American brand Huggies (Kimberly-Clark) and the Japanese Merries also fell, the expert adds.
If the product familiar to the buyer leaves the information field and the price for it rises, he switches to cheaper goods, Roman Kvinikadze notes. However, Alexey Popovichev, Executive Director of Rusbrand, believes that with the return of marketing activity, the share of sales of international brands will begin to recover.
The X5 Group expects the continuation of the trend to increase the popularity of retailers’ trademarks. But Mr. Popovichev does not expect private labels to be able to completely displace or replace global brands. Practice shows that when the economic situation levels off, buyers return to buying goods of familiar brands even in a higher price category, the expert explains.
In general, according to NielsenIQ, in ten months of 2022, sales of baby care products in physical terms decreased by 6.4% year-on-year. At the same time, in monetary terms, they grew by 18.8% year-on-year, including due to inflation.
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