The CEO of System U, Dominique Schelcher, warns of a risk of a very sharp increase in the coming months in the price of this product, which is already expensive for young parents.
It’s nothing less than a “flight” prices. In an interview at Parisian (article subscribers) the CEO of System U, Dominique Schelcher, said on Wednesday March 1 that he expects an increase “from the price of diapers by 25%” in the next weeks. The boss of the sign, who speaks as the annual negotiations between distributors and manufacturers end on Wednesday evening, points to the tariff requests of the latter, according to him higher “by 30%” at their level of last year.
Several factors explain the sharp rise in the price of disposable diapers, essential to the vast majority of parents (washable diapers remain a very small minority), and while a child consumes no less than 3,800 to 4,800 before learning to cleanliness, according to the National Agency for Health, Food, Environment and Work Safety (Anses), with an average price of between 15 and 30 euro cents per unit.
A “catch-up” after having “cropped on the margins”
To produce diapers, it is necessary in particular cellulose, derived from wood and the raw material of paper. “The price of paper pulp has exploded in 2022, by around 40%”, recalls Nicolas Léger, analyst for the firm NielsenIQ. However, in February 2023, “the price increase for baby changing is only 8.5% compared to February 2022”, compared to 25% for paper towels and 21.5% for toilet paper, other products in the same category. The experts contacted by franceinfo therefore evoke a “catching up” on the price of diapers.
But why is inflation on diapers several months behind other products in the same range? “Manufacturers have cut back on their margins and there they are forced to catch up with prices”, sums up Philippe Goetzmann, consumer and agri-food consultant. All this is due to the particularity of the nappies, a loss leader for which “e-commerce competition is important”. “On these products, as on laundry detergent, distributors must have attractive prices”, explains Nicolas Léger. Diapers are also a product “promophile”he recalls.
“In hypermarkets and supermarkets, over the last twelve months, 42% of diaper sales have been promoted, compared to 21.7% for the rest of the products.”
Nicolas Léger, analyst at NielsenIQat franceinfo
Manufacturers therefore take advantage of these annual negotiations with large retailers to rebalance their prices. And if the increase could be more diffuse with private labels, capable of regularly revising the price of their own products upwards, the disposable diaper market, largely dominated by large groups such as Procter & Gamble (Pampers), offers these manufacturers an ideal window of opportunity to drive up prices as a whole.
Inflation spread over several months?
Nevertheless “Retail players complain about a lack of transparency on the part of manufacturers. How do they justify such an increase in their demands?”, asks Frank Rosenthal. For this expert in trade marketing, the war in Ukraine, traditionally evoked to justify the general increase in prices, does not really explain this inflation to come for diapers. “Oil is holding steady, gas is falling, food prices are falling in the US”he recalls.
A question especially torments young parents: will the very sharp increase in the price of diapers happen quickly? According to the specialists interviewed, this inflation could last until the summer, because “for products that are easy to store, such as diapers, distributors sell their quantities over several weeks”explains Nicolas Léger. “Mass distribution has a culture of storage before the rise in pricesadds Philippe Goetzmann. For diapers, there is no expiry date or problem to keep them, even if it takes cash to pay for them and the capacity to store these products.
On the other hand, everyone agrees that the inflation announced by Dominique Schelcher and the other retail executives will be very real. “The 25% inflation is very likelyfears Nicolas Léger. The rise in prices will continue in April, May and June. Then it should stabilize.”