Eye on the Bottom Line, Kimberly-Clark Folds Diaper Business in Europe

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Procter & Gamble and other diaper-makers may be cheering the news that Kimberly-Clark is abandoning Europe with its diaper business. But the move by the American giant, also maker of Kleenex and other paper products, also will land yet another blow to the fragile economy. Kimberly-Clark confirmed in its latest earnings release that it plans to eliminate up to 1,500 European jobs with the move and its broader restructuring plan in Europe, or about 2.6 percent of its global workforce.

The way CEO Tom Falk put it, the company didn’t have any choice after banging its head against a wall in Europe for its disposable diapers. P&G controls 44 percent of the market with Pampers, while Kimberly-Clark’s Huggies brand had garnered only a 12-percent share over more than two decades in the market. Private-label diaper brands combined have a bigger share than Huggies.[more]

Even though its diapers (aka “nappies” in the UK) are available through at least the end of the year, the company has removed its Huggies Club UK Facebook page (although its website and Twitter feed is still alive). Kimberly-Clark had tried to stand out with humorous advertising feature baby “Alfie” (who still has ‘his’ own Twitter feed) in the UK market, but it failed to impact its bottom line.

“It’s been hard to get the attention of the consumer in that environment,” Kimberly-Clark CEO Tom Falk told the Wall Street Journal. Huggies had not “commanded high levels of loyalty” within its consumer base, Tristram Wilkinson, a Kimberly-Clark executive in the U.K., told Marketing magazine there.

Working against Huggies and other CPG brands, in Europe and the United States, is the fact that consumers are more and more willing to purchase store brands — and increasingly, they’re trusting private labels to provide attributes for which they used to trust only brands, such as product quality.

In the U.K., for example, another well known brand, Covent Garden Soup Co., which created the fresh-packaged-soup category, is being delisted by Tesco, the nation’s ranking supermarket chain, a year after Tesco launched its own fresh-soup brand.

Kimblerly-Clark is spinning the positive in the move as well: Pulling its resources out of a troubled European presence, in a slumping economy, will allow the company to invest more in other markets where the diaper action is hotter, including the baby-booming markets of China, Brazil and Russia.

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