Industry News: Indonesia's Maternity and Baby Industry Shows Unlimited Potential as Diaper Brands Expand into Southeast Asia

In contemporary society, baby diapers, as an indispensable product for childcare, have penetrated deeply into the daily lives of countless families. Despite declining birth rates in certain regions such as South Korea, the United States, and Japan, many developing countries still provide a vast potential customer base for the baby diaper market due to higher birth rates and large population bases.

According to the "2024-2028 Indonesia Baby Diaper Market Investment Environment and Prospects Assessment Report" released by the New Horizon Industry Research Center, in 2023, the global baby diaper market size is about US$41.09 billion. It is expected that by 2028, the global baby diaper market size will reach US$46.48 billion, with a compound annual growth rate (CAGR) of about 2.5% from 2023 to 2028.

Against the backdrop of accelerated lifestyles and improved quality of family life, the demand for baby diapers as an essential modern childcare product continues to grow, especially in developing countries like Indonesia.

Indonesia has a large population. As of 2022, the population has exceeded 270 million, and the population structure is young. The birth rate is as high as 15%. It is the country with the largest number of newborns among the ten ASEAN countries in the past 10 years. At the same time, Indonesia is also one of the largest economies in Southeast Asia. In recent years, the domestic economy has grown rapidly and the size of the middle-class population has continued to expand. As Indonesia's per capita income continues to increase, consumers have more money to pay for the health and comfort of infants and young children, and the baby diaper market has broad development prospects.

Indonesia's Maternity and Baby Industry Becomes a Market Focus

Relevant data shows that the sales volume of the "online + offline" dual-channel sales market for maternity and baby products in Indonesia has rapidly exceeded billions of dollars. Moreover, Indonesia ranks as the fourth largest trading partner of China's "Belt and Road Initiative," with Chinese maternity and baby product exports leading globally. According to China's customs export data, China's exports to Indonesia reached 177.146 billion yuan in 2022, ranking seventh in exports of maternity and baby-related products.

At the same time, according to data from the Indonesian Internet Service Providers Association, in 2023, the national user scale in Indonesia has exceeded 215.63 million, an increase of 2.67% from 2022. The construction of domestic e-commerce platforms is also accelerating, with a wide range of maternity and baby products available on these platforms, offering consumers greater purchasing options.

Many diaper brands are showing keen interest in the Southeast Asian market: According to Euromonitor data, the overall retail sales of disposable hygiene products in Southeast Asia reached $6.5 billion in 2022, with baby diapers being the largest subcategory in the hygiene products market in Southeast Asia.. Last year, the market size exceeded US$4 billion, and the year-on-year growth from 21 to 22 reached nearly 11%. It is estimated that the baby diaper market will exceed US$6 billion in 2027.

Data source: Euromonitor

Behind the Keen Interest Lies Substantial Market Prospects

The Southeast Asian market has a huge base of maternal and child users and a population of up to 100 billion newborns. The current population of Southeast Asia has exceeded 600 million, with a very high level of youthfulness. At the same time, according to Statista's 2020 survey of Southeast Asian women's average fertility rates, Filipino women have an average of 2.49 children, Indonesians have 2.27 children, Vietnamese have 2.05 children, and Malaysians have 1.97 children. This means that, on average, each couple will have at least two or more children. A higher willingness to have children will bring about a strong demand for diapers and maternal and child products.

The scale of the Internet industry and the penetration rate of e-commerce in the Southeast Asian market continue to increase. In the past, offline consumption in Southeast Asia accounted for a very high proportion. Now, with the rapid development of online e-commerce and the continuous increase in online penetration, the purchasing power of local residents cannot be underestimated. On Lazada, a mainstream e-commerce platform in Southeast Asia, according to official data, maternity and baby products have always been one of the popular and best-selling categories on the platform, experiencing multiple outbreaks and stable growth during the pandemic.

Data source: Lazada Southeast Asian e-commerce

Market Opportunities Bring In a Large Number of Brands

Many European and American as well as Japanese companies, after experiencing sluggish growth in their domestic markets, began to expand into the Southeast Asian market several years ago: in 2018, Unicharm acquired Thai sanitary product manufacturer DSG International for US$530 million, expanding its channels into the Southeast Asian market; in 2020, Kimberly-Clark acquired Softex Indonesia, the leader in the Indonesian personal care market, for approximately US$1.2 billion, with 80% of its sales coming from baby diapers.

For domestic brands, the Southeast Asian market not only has a large newborn population, but also sees continuous growth in demand for maternity and baby products. For diaper brands urgently seeking new growth, this market is undoubtedly a tempting cake, attracting countless players to join. Currently established brands include Babycare, MamyPoko, Johnson's, and Yiyang.

Take Babycare as an example: by entering mainstream e-commerce platforms such as Lazada and Shopee in Southeast Asia, the brand has successfully established a "big brand" image of high safety, high attractiveness, and personalized full-category maternity and baby products among local consumers. By leveraging the platform's mature overseas warehousing layout and various promotional strategies such as multi-item discounts and coupons, Babycare provides consumers with high-quality, affordable, and efficient logistics services, achieving breakthrough sales and gaining favor among Southeast Asian consumers.

Babycare product picture Source: Lazada Southeast Asian e-commerce

Behind the scenes, with the trend of expanding into Southeast Asia in recent years, Chinese diaper brands have gradually integrated into the lives of local consumers, but the Southeast Asian hygiene products market is still mainly controlled by Western and Japanese brands. A general manager of a cross-border e-commerce company with extensive experience in Thai business operations said, "Their perception of brands is that the first tier is Western brands, the second tier is Japanese and Korean brands, the third tier is Chinese brands, and the fourth tier is Southeast Asian brands."

With European, American, Japanese and Korean brands controlling "half of the market", many domestic brands have finally achieved success through unremitting efforts in channels, products, marketing and other aspects. Substituting this logic into the Southeast Asian market, it seems to be a new long march for Chinese diaper brands.

Conclusion

Under the influence of global sustainable development and environmental protection concepts, modern consumers are paying increasing attention to the environmental attributes of products, and Indonesian consumers are no exception. Indonesian consumers are beginning to prefer infant and toddler products that are environmentally friendly and comfortable, prompting baby diaper manufacturers to adopt biodegradable materials and environmental protection technologies in product design and production processes to meet market demand. Meanwhile, the rise of e-commerce platforms and the improvement of logistics systems provide Indonesian consumers with more convenient shopping channels, further driving the growth of baby diaper demand.

The entry of brands has also sparked the need for more demand connections. Therefore, the PCE Personal Care Expo (Jakarta Station) will be held at the Jakarta International Expo Center in Indonesia from June 4th to 6th this year, connecting global resources and helping Chinese companies participate in overseas exhibitions in the form of "domestic online matching and overseas offline product exhibitions." Through the full-chain service of "exhibition products going overseas, exhibitors going online, buyers attending, and instant business negotiations," a "high-quality and efficient" new exhibition model is created.