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  • - [Carter] The average baby

  • will go through over 3,000 diapers in a single year.

  • At around 70 to $80 a month,

  • the cost of these diapers

  • will set a family back nearly $1,000 a year.

  • And right now, this essential is getting more expensive

  • for millions of Americans.

  • In March, diaper manufacturer Kimberly-Clark announced

  • that it would be raising prices on many

  • of its products, including diapers.

  • And then competitor Procter & Gamble announced

  • it would be doing the same.

  • For families with multiple children,

  • these price hikes could add up to hundreds

  • of dollars more per year.

  • - These price increases are happening

  • on household goods, on food, on gas.

  • Not only is it an amount that adds up,

  • it's an amount that comes in addition

  • to everything else costing more.

  • - [Carter] So what's causing diaper prices

  • to rise so dramatically?

  • It has a lot to do with the prices

  • you're seeing here, and here.

  • (lively music)

  • ♪ I'm a big kid now

  • - [Narrator 1] Parents are more likely to choose Luvs.

  • - [Narrator 2] Pampers, the number one

  • pediatrician recommended brand.

  • - [Narrator 3] We're Huggies, we've got just what you need.

  • - [Carter] It may look like there are a lot

  • of options to buy diapers

  • but in reality, there are less

  • than what it may seem.

  • Only two companies control about 80%

  • of the US disposable diaper industry:

  • Procter & Gamble and Kimberly-Clark.

  • The same two companies

  • that announced price hikes earlier this year.

  • - It means these companies

  • are less vulnerable to competition.

  • - [Carter] Sharon Terlep reports on consumer products

  • for The Wall Street Journal.

  • - If P&G makes a decision on pricing,

  • that might drive the whole market,

  • whether it's up or down.

  • They don't have the concern as much

  • of having higher prices

  • and then having their customers go somewhere else.

  • - [Carter] Most disposable diapers are made

  • with layers of blended materials

  • to increase absorbency,

  • including this fluffy part,

  • which is made from wood pulp.

  • Just a few months ago,

  • lumber prices were through the roof,

  • powered by low mortgage rates

  • and demand for home improvement projects

  • that drove a suburban building boom.

  • This lifted the price of wood, including pulp,

  • which in turn drove up costs for diaper manufacturing.

  • - Costs of logging have escalated due

  • to the inputs at that stage in the value chain,

  • namely the labor and the logistics

  • and the equipment associated

  • with felling trees.

  • - [Carter] David Garfield is a consultant

  • who has worked in the consumer products industry

  • for almost three decades.

  • - And those increases in costs

  • do ripple through the production of pulp and paper.

  • - [Carter] But one of the biggest commodities

  • driving the price of diapers is the same one

  • that is running your car.

  • - Oil price is soaring,

  • an OPEC-fueled rally sending crude prices higher,

  • now up about 20% just over the last month.

  • - [Carter] As prices have risen at the pump,

  • so have costs to produce diapers.

  • - Some of those ingredients or materials

  • that are incorporated into diapers

  • are derived from petroleum.

  • And so with the increase in price

  • of the barrel of oil comes an increase

  • in the material that goes into making diapers.

  • There's also the knock-on effect

  • of diesel fuel prices up,

  • which impact the transportation costs,

  • as well as the material costs.

  • - [Carter] Petroleum or crude oil

  • is the same raw material used

  • to make sodium polyacrylate.

  • This is a polymer that's used in diapers

  • to help make them more absorbent.

  • It's what these absorption beads are made out of.

  • Back in February, a winter storm pummeled Texas,

  • forcing many petrochemical manufacturing plants

  • to shut down, including those

  • that make acrylic acid,

  • a compound in sodium polyacrylate.

  • The extreme weather caused acrylic acid shortages

  • for months, which drove up the price

  • of sodium polyacrylate.

  • This contributed to the rising costs of diapers.

  • - Part of it was this piling-on effect.

  • It was just one more thing on top of everything else.

  • But it made this material harder to come by

  • and so at the time

  • when I spoke to Kimberly-Clark,

  • they said it's not driving a shortage

  • but it's certainly limiting options.

  • - [Carter] But it wasn't just limited access

  • to raw materials that have driven up diaper prices.

  • Throughout the pandemic, ongoing shipping issues due

  • to a surge on online orders, COVID restrictions,

  • and driver shortages have caused significant delays

  • across the US.

  • This has impacted deliveries across industries,

  • including diapers, which has caused

  • freight costs to balloon.

  • - You have the trucking rates, the labor for drivers,

  • the equipment that needs to be maintained and replaced,

  • even the insurance costs.

  • So producers are seeing significant increases recently

  • in overall transportation costs.

  • - [Carter] Diapers, unlike some other

  • smaller personal care items,

  • are impacted more by shipping costs

  • due to the product's bulky size.

  • - The vast majority of diaper production

  • in the US is local.

  • There's a very, very small percentage that is imported.

  • It's a highly, what they call, volumetric product,

  • meaning that per dollar of sales,

  • it's expensive to ship.

  • And so it's largely trucking transportation

  • within the US from the factories

  • to distribution centers

  • and ultimately through retail channel partners.

  • - [Carter] Still, there's one other factor

  • affecting the price of diapers

  • that has been trending for years.

  • In the US, births have been steadily dropping

  • for the past decade.

  • The number of babies born in 2020 dropped by 4% compared

  • with the previous year,

  • partially driven by a trend

  • of women choosing to have fewer children later in life.

  • - As the birth rate declines,

  • it has an instant effect on diaper sales

  • because babies need diapers the minute they're born.

  • So if there's fewer babies born,

  • it's not some products

  • where 10 years down the road,

  • a smaller population might trickle down.

  • If fewer babies are born in 2020,

  • diaper sales go down in 2020.

  • - [Carter] To make up for lower diaper sales,

  • companies have increased prices

  • to partially fill the gap.

  • - To offset this decline in birth rate,

  • the companies are trying

  • to basically sell more expensive diapers

  • that are nicer diapers.

  • So that competition has become more intense.

  • There's more organic diapers.

  • There's a lot of features in diapers now

  • that didn't exist 10 years ago.

  • - [Carter] As diaper prices have increased,

  • for many working families,

  • the financial strain has added to a list

  • of growing expenses.

  • - The need in 2021 seems

  • to be almost as high or higher as it was in 2020.

  • So even as the economy's recovering,

  • it's not going back to 2019 levels.

  • - [Carter] Experts like David Garfield say

  • that even if commodity and shipping costs come back down,

  • because of increased margins,

  • diaper price increases will likely stay inflated

  • for the near future.

  • (lively music)

- [Carter] The average baby

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The Surprising Ways Inflation Is Hitting Diapers | The Price Index | WSJ

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    moge0072008 posted on 2021/09/26
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