Kimberly-Clark takes hit on Huggies
Kai Ryssdal: Here’s today’s commodities story: diapers. Setting aside all scatological references, inflation’s probably not the first economic phrase that comes to mind when diapers are mentioned. But today, the consumer goods giant Kimberly-Clark reported a steep drop in quarterly profits. It’s been clobbered by rising costs of commodities like wood pulp and oil.
Marketplace’s Jennifer Collins has more on the diaper index.
Jennifer Collins: Nine out of 10 babies in North America wear disposable diapers.
Luvs commercial: What happens in diapers should stay in diapers.
What happens in diaper prices goes far beyond babies — to commodities.
Andrew Urban is a diaper consultant. He’s been in the business for 30 years, and he’s got the punch lines to prove it.
Andrew Urban: My career reached a new bottom right?
Urban explains:
Urban: The absorbency in a diaper is really due to super absorbent polymer, which is a petroleum-based derivative.
In other words, it comes from oil. Diapers also contain polypropylene and polyethylene — also from oil.
Ian Butler: Every one of those things, the price is going up.
Ian Butler is an oil products expert.
Butler: They’re slamming increases through as best they can.
Kimberly-Clark says the cost of raw materials will more than double this year. So that big box of Huggies will cost a few extra dollars. Butler says Pampers and Luvs are likely to get more expensive too.
Steven Chercover: The fact is, inflation’s back.
Steven Chercover covers wood products for D.A. Davidson & Company. Fluffy wood pulp is also a staple in diaper production. And its price has been spiking as well. But Chercover says consumers will take the hit.
Chercover: Assuming you love your kid, you’re just not going to scrimp on that.
He says even if parents switch to cotton diapers — cotton, too, is at record highs.
I’m Jennifer Collins for Marketplace.
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