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P&G imports China-made diapers amid domestic cost

challenges

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Chinese diaper imports triple, quality matches US-made

products

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Tariffs impact prices, but consumer loyalty remains strong

By Jessica DiNapoli

NEW YORK, Aug 25 (Reuters) - Procter & Gamble ( PG ) is

selling luxury aloe-infused "bumbum" brand diapers made in China

at retailer Target ( TGT ) as its top-selling Pampers and Luvs

brands lose ground to a growing number of imported rivals

touting similar features.

The move is unusual for the Cincinnati-based consumer

products maker, the biggest globally, because most of what it

sells in the United States is manufactured domestically.

Target ( TGT ) said earlier this year it would offer bumbum as part

of an overhaul of its baby and toddler products, but did not

identify the brand's manufacturer. P&G said in a statement that

it has introduced bumbum as part of its broader strategy to

offer superior products, and that the diaper complements its

Pampers and Luvs brands.

P&G, which makes household basics spanning from Dawn dish

soap to Tide laundry detergent, did not respond to questions

about the diaper's manufacturing in China or the effects of

tariffs. Target ( TGT ) did not respond to a request for comment.

P&G's shift to ship diapers from China shows how imports

have been more attractive because of the costs of U.S.-made

goods, and that the consumer products maker is searching for a

way to grow sales in its top categories like baby care.

At Target ( TGT ), P&G's top-of-the-line Pampers Pure diapers cost about

37 cents per each size 2 diaper, fitting an infant weighing up

to 18 pounds, while another Chinese-made luxury brand, Millie

Moon, are 28 cents. Bumbum diapers are a penny less than Millie

Moon.

P&G is increasing prices partly due to tariffs, executives said

last month, even as its sales falter due to shoppers spending

less because of worries about the economy. The levies have

already led to price hikes on other essential baby products

including car seats and strollers, which are largely made in

China.

P&G executives have said on earnings calls over the last 18

months that sales in their baby business are down, and that they

are working on enhancements to their brands.

Pampers, which still leads the $5.4 billion U.S. disposable

baby diaper market, saw its share of it slip to 32.3% in 2024

from 32.5% in 2022, while budget brand Luvs saw a drop to 6.9%

last year from 9% in 2019, according to Euromonitor.

Pricie Hanna, founding partner of Price Hanna Consultants,

which focuses on diapers and other absorbent products like pads,

said P&G may be testing bumbum in Target ( TGT ) to later incorporate

some of the features in U.S.-made Pampers.

The new diapers are advertised as being aloe-enriched with

"cloud-like" softness, echoing rival Millie Moon's claim of

"cloud touch" softness.

Competitor Kimberly-Clark ( KMB ) last year introduced a

value-priced Snug & Dry diaper - which it advertises as "cloud

soft" - using Chinese research and development and supply chain

teams.

The U.S. diaper market is cut-throat as fewer babies are

born, pushing manufacturers to come up with improvements they

can charge more for and market to attract new customers.

Chinese-made diapers, which may have once been rejected by new

parents, have grown in popularity. Imports by weight of diapers

made in China more than tripled in the two years ended April 23,

according to import data provider ImportYeti.

The quality of Chinese-made diapers has significantly increased

and there is no discernible difference between those made in

China and the United States, industry experts said. The Chinese

government also heavily subsidizes factories making diapers and

their components, and laborers earn significantly less, allowing

the products to undercut U.S.-made ones, the experts said.

Price hikes reflecting tariffs have yet to fully hit store

shelves, with more expected in the fall as retailers sell older

inventory. The increases could lead to consumers searching for

even cheaper brands.

However, if tariffs lead to further price hikes on

Chinese-made diapers, consumers could switch out of them, Hanna

said.

BRANDS GROW SHARE

Other China-made brands include Parasol which is available

at Target ( TGT ) and Amazon.com Parasol is a premium product,

priced at roughly 42 cents each, less than other high-end

European-made and Canadian-made brands such as Coterie and

HealthyBaby. Some store-brand diapers are also made in China,

industry experts said.

"The thing is that the diapers from China are so cheap from

the get-go," said Shazi Visram, the founder of HealthyBaby.

Hong Kong-based Zuru Edge's Rascals and Millie Moon brands

have been winning over new parents with cut-rate prices, soft

material and social media campaigns. The Rascals brand sells for

about 21 cents a diaper at Walmart ( WMT ).

Rascals and Millie Moon have had triple-digit compounded

annual growth rates since 2020 and 2021, respectively, according

to Bain Consulting, citing Nielsen data.

Their market share, totaling 3.5% last year, according to Bain,

is still tiny compared to Pampers. The consulting firm said the

figure does not cover all of the brands' sales, such as

e-commerce, and "only depicts a portion of their growth story."

Zuru Edge did not immediately return a request for comment.

Parasol founder Jessica Hung said that so far she has been

looking to cut costs rather than pass price hikes along to

shoppers. For example, she is now packing the diapers in a plain

brown box rather than one with colorful prints.

"It wouldn't kill the market to pass on the price, but we

would definitely lose some customers," she said.

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