It is May 2022. After two years of corona lockdowns, the Negenmaandenbeurs can continue for the first time. In its retrospective, the Negenmaandenbeurs speaks of a striking trend. Sustainability is one of the two most important trends, in addition to tech solutions. “The reusable diapers stood out. Previously, there was only one supplier at the fair, this year there were already three”.
It is a logical result of the growing popularity of the reusable diaper. Between 2014 and 2021, the search volume for reusable diapers grew by 20% annually (Source: Google). The advantages of the modern cloth diaper are becoming visible to more and more expecting parents. Due to the growing popularity, there is more room for new entrants. New brands are emerging that distinguish themselves with other models, a different style and different price points. Suddenly there is a reusable diaper for everyone that is attractive in terms of use, design and affordability.
The cloth diaper industry is entering the corona period in good conditions. The year 2019 was a year with good growth figures for many manufacturers and sellers. Cloth diapers are trending on social media. There are active communities on Facebook and Instagram where users help each other for tips, but also share the latest brands and prints with each other. New prints often sell out quickly and are sometimes sold second-hand for more than new. This BBC article shows how far this can go. Manufacturers and sellers want to scale up to meet the growing demand and many users from the community dreams of starting their own brand or store.
Early 2020, the Scottish company TotsBots (at that time one of the leading players in the reusable diaper industry in Europe) is acquired by a private equity investor. For the first time, there is also interest from professional financial players in the reusable diaper industry. In the press release, the investor writes: The market for disposable nappies has struggled in recent years and is estimated to be declining at 6% per annum, as the consumer backlash against single use plastics increases.” It is clear that this private equity investor considers itself lucky with the acquisition of a leading player in a market that will further take away market share from the polluting disposable diaper.
In addition to TotsBots, Charlie Banana is also acquired in January 2020. This Asian-American brand is acquired by Procter & Gamble, the parent company of Pampers. It is clear that Pampers sees the trend towards reusable and wants to gain a grip on this market. Pampers sees potential to launch hybrid diapers on the market with a disposable inner diaper and a reusable cover in addition to Charlie Banana. If even Pampers invests in reusable diapers, it may be difficult to compete, but with the reusable diaper itself it will be fine, is a thought that many in the reusable cloth diaper industry think.
Not much later in 2020 we will be faced with the consequences of corona such as lockdowns throughout Europe. The corona period brings challenges with making the reusable diaper visible to expectant parents. Fairs such as the Negenmaandenbeurs can no longer be organized and physical consultations can no longer be given. But at the same time, parents are at home more and can be found online more often. This combination has a positive influence on the demand for reusable diapers, which are almost exclusively sold online.
In 2020, delivery problems arise, because production in some cases decreases which is related to corona measures, while demand increases. In these times, it is a challenge to stock reusable diapers. Reusable Nappy Week 2020 almost did not happen because we feared that we would not be able to buy enough for the demand that was there at that time in a discount campaign. And for some brands that was the case and we had to explain to some disappointed customers why we were going to do such a discount campaign with so little stock. The situation improves in the course of the year as production and demand come into balance again.
In the spring of 2021, HappyBear Diapers managed to raise €400,000 from investor Shawn Harris with a pitch in the television program Dragons Den. This provided national recognition for the reusable diaper. The ambition is to grow significantly in the coming years by appearing on the shelves of real baby stores such as Prenatal and Babydump, but also of supermarkets, drugstores and online retailers at home and abroad. In the Netherlands, the reusable diaper is currently mainly found online and the improved visibility should help to make the cloth diaper better known and more popular.
In May 2021, a new Dutch brand will be launched: Happy Naps. Founded by three young people who do not have children of their own yet and already have busy careers in other industries. But they do see the potential to make a successful business out of this. A few months after the start, they raise additional capital for international expansion and stock for building a wholesale channel. There is an interesting podcast in which monthly updates on the launch of the brand are shared by the owners (Dutch spoken).
In the same month (May 2021), Billie Wonder succeeds in attracting an investor who will help transform Billie Wonder from a retailer to its own brand. For the marketing, collaboration is sought with influencers and Dutch celebrities. Both Happy Naps and Billie Wonder are responding to the trend that prints are focused on the style that parents like. Historically, colorful childish prints were the norm in the reusable diaper industry, but in a short time, the minimalist prints that parents find attractive are becoming popular. Both new and existing brands are diving into this trend, which quickly makes it difficult to continue to come up with a truly distinctive style.
In September 2021, the news shows that the English Bambino Mio has brought a private equity investor on board who is investing approximately €15m to acquire a minority stake in this British company. The valuation for Bambino Mio in 2021 is the highest known valuation of any company in the reusable diaper industry to date. In addition to its own brand, Bambino Mio is also a producer for many private label brands in Europe, such as supermarkets and drugstore chains. Bambino Mio is the largest reusable diaper company in Europe. In 2020, Bambino Mio achieved a turnover of approximately €13.5 million. The private equity investor indicates in the accompanying press release that it expects the reusable cloth diaper market to reach a market size of more than €1.1 billion in 2025. This says something about the degree of fragmentation in the reusable diaper market (many small companies in which the European market leader has only about 1% market share) and about the growth expectations (after years of 20% market growth) for the coming years.
We are closing 2021 and looking ahead to 2022. The reusable diaper is more popular than ever. Never before has a reusable diaper company been valued as highly as in 2021 and never before has a Dutch company succeeded in raising external capital for reusable diapers, but in 2021 there were three.
The demand has been increasing for years and new brands are effortlessly introduced and embraced by the reusable diaper community. We are approached weekly by new brands that want to collaborate with us, but we are becoming increasingly critical. A new brand really has to add something to our range by being distinctive in terms of design, functionality, price point or material, for example. More than 90% of what comes along does not meet these requirements. We do not see it as a problem yet. At the end of 2021 we are growing fast, very fast and we decide that we need to expand our team further. At the beginning of 2022 we are hiring three new colleagues at the same time. This will help us to continue to deliver the packages on time and at the same time free up time for projects that are needed in the long term to be able to continue growing.
For the first time we sign up for the Negenmaandenbeurs, which is being held once in May, now that the corona measures have been relaxed. A major investment, but due to the good years we can afford it. We want to reach even more people to get them excited about reusable clothd diapers. And what event is better suited for this than the largest baby fair in the Netherlands, which can finally continue again? We are there together with two other reusable diaper suppliers, a unique event in the history of the reusable diaper. Pampers salespeople visit our stand to study the reusable diapers. We receive media attention and achieve the closing press release of the Negenmaandenbeurs as an important trend. Everything seems good.
To be continued.
