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A piece of aunt towel holds up a 40 billion market, and China's sanitary napkin industry has undergone great changes in 30 years

There is a proverb in the consumer industry that is almost regarded as a norm: If you win women, you will win the world. In such an era of rapid changes in consumer goods, if women can not buy new clothes and cosmetics for a month, they must not forget to replenish the most important inventory-sanitary napkins every month.
Traceless and thin, comfortable cotton, dry mesh surface... The design and function of sanitary napkins continue to be subdivided and evolved, serving 400 million women of school age in the Chinese market. In the field of women's care, how else can they attract their attention?
Today, Xiaoqi will deconstruct China's sanitary napkin industry with a long article, trying to let investors and entrepreneurs see the current situation, problems and future of the sanitary napkin industry.
Women's periods and sanitary napkins have always been regarded as a private topic. Although sanitary pads are a necessity for almost all women aged 14-50, female friends are shy to share, and male friends also regard it as a mysterious realm.
If you ignore such a large consumer goods market with rigid demand and strong anti-cyclicality, it is tantamount to losing a new investment opportunity in consumer goods, especially with the rise of this wave of new consumption upgrade opportunities in recent years, There are many entrepreneurial and investment opportunities in the middle.
Let's take a look at this interesting industry from a business perspective. Next we will discuss:
1. How big is the Chinese sanitary napkin market? What is the current situation and situation?
2. Who are the big Nuggets players in the 40 billion market? What is the current main business model and competitive landscape of this industry? Which brands deserve more attention?
3. Where are the trends and investment opportunities for women's nursing in the future?

China's sanitary napkin market scale and status quo
1.1 Industry scale and potential
The modern sanitary napkins we are familiar with were introduced into my country in the 1980s and became popular in the 1990s. From the difficult entry into the Chinese market, to the 96.5% coverage rate that is now the same as that of developed countries such as the United States, how did this industry, which started 20 years later than Japan, accelerate its development and make its business scale four times that of Japan?
Let's start with the origin and brief history of sanitary napkins.
The history of sanitary napkins originated from medical bandage materials, which were first used to stop bleeding in wounded, and retailers such as Johnson & Johnson and Kimberly-Clark smelled business opportunities.
After the end of World War I, this medical material fiber cotton was made into clean and soft sanitary napkins and sold in stores. The advent of adhesive sanitary napkins in the early 1970s meant that sanitary napkins no longer needed to be fastened with straps and pins, and the modern sanitary napkins we know took shape, opening a new chapter in feminine products.

Nonetheless, Chinese women have not gone through this transition. Until the 1980s, Chinese women were still using outdated sanitary belts—the tied cotton cloth was padded with toilet paper or plant ash to absorb water, and the cotton cloth had to be recycled and reused.
In 1982, China introduced the first sanitary napkin production line from Ruiguang Co., Ltd., a well-known Japanese manufacturer of nursing products. This disposable menstrual product gradually entered everyone's attention.
For women at the time, this soft, white, high-end product was somewhat inconceivable. However, due to the high price, the penetration rate is not high. Until 1990, the annual sales of sanitary napkins were only 2 billion pieces, which means that every woman of the right age consumes only 4 pieces a year.
As in much of the world, Chinese consumer demand for sanitary pads isn't booming—generational consumption habits need to be nurtured slowly.
The 1990s was a turbulent gestation period. At this time, Hengan Group has not yet launched the well-known domestic brand "Seven Degrees of Space", but its "Anle" sanitary napkin has occupied 40% of the market share by virtue of product reputation and advertising offensive.

Straight sanitary napkins from the 80s
At this time, foreign brands such as Hushubao, Sophie, and Gaojiesi also aimed at the Chinese market. With advanced technology and rich marketing experience, they launched a fierce offensive and won the other half of the sanitary napkin field. At this time, Guangdong Jingxing's "ABC" brand sanitary napkins bypassed first-tier cities and quietly occupied the market in small and medium-sized cities.
From 1990 to 1999, the consumption increased from 2 billion to 30 billion, and the penetration rate of sanitary napkins exceeded half.
At the beginning of the 21st century, China's sanitary napkin industry entered a new stage of continuous renovation and refinement of functions and designs.
According to statistics, the coverage rate of sanitary napkins in China reached 96.5% in 2016, which is already on par with developed countries such as the United States. According to the data of the National Bureau of Statistics, China's female population aged 14-49 will also stabilize at 360 million in the future, so is there still room for growth in the sanitary napkin industry, and will there be a ceiling for this industry?

From 2012 to 2016, the average annual compound growth rate of the world sanitary napkin market was 5.9%, and its growth mainly came from emerging markets such as India, Egypt, and Africa, while the Chinese sanitary napkin market grew steadily.
But if we compare it with neighboring Japan, we will know that there is still huge potential to be tapped in this market. Why do we judge it this way? Xiao Qi summed up the following reasons:
1. There is room for improvement in the frequency of women's menstrual sanitary napkin use.
According to the survey, Japanese women change their sanitary napkins an average of 6 times a day during their menstrual period, while in China, few women can achieve this changing frequency. Even in the days with the largest flow, the average replacement frequency is only 3-4 times.
2. Menstrual periods tend to extend to both ends of a woman's age.
According to a 2010 study by the Pediatric Society of the Chinese Medical Association, the age of female menarche has advanced to 12.3 years old, which is 0.81 years earlier than ten years ago, and this market will expand its market capacity.
3. Consumption upgrades make some women give up cost-effectiveness and pursue a better experience.
The rise of affordable luxury makes users willing to invest more in the sanitary napkin market. In recent years, emerging sanitary napkin brands that mainly focus on the mid-to-high-end market have performed well under the blessing of the Internet and high-end offline supermarkets.
According to the forecast of the tissue paper professional committee of the China Paper Association, by 2020, the market size of China's sanitary napkins (including pads) will reach 61.1 billion yuan.
1.2 Characteristics and status quo of sanitary napkin industry
Before looking at an industry, let's first define the scope of the industry.
The well-known sanitary napkins, like baby diapers, mainly use paper raw materials and belong to paper products; according to product characteristics and uses, they are both disposable sanitary products.

Disposable sanitary products refer to disposable sanitary products in a broad sense, that is, various daily products that are discarded after one use, are in direct or indirect contact with the human body, and are used for the purpose of human physiological hygiene or health care (antibacterial or bacteriostatic) Daily necessities.
With the change of population structure and the rise of living standards, the demand for disposable sanitary products has continued to grow, and the size of the sanitary napkin market, which accounts for a large proportion, has also grown steadily.
In 2016, the total size of my country's disposable hygiene products market reached 82.94 billion yuan, an increase of 3.6% over 2015. Among them, feminine sanitary napkins (including pads) occupied half of the country, and became the category with the highest proportion with 47.6%, surpassing baby diapers and adult incontinence products.

Due to the direct contact with the human body, disposable sanitary products have certain particularities in the production process. If we deconstruct a piece of sanitary napkin, from top to bottom are:
Surface layer: the part that directly touches the skin, the main materials are non-woven fabric and PE perforated film, which is what we commonly call "cotton soft surface" and "mesh surface". PE perforated film is cheap and breathable, but due to different climates and habits, consumers in China and Japan prefer to consume sanitary napkins made of non-woven fabrics.
Absorber: Used to absorb liquids. The main materials are polymer water absorbent resin (SAP), wood pulp, fluff pulp, absorbent paper, etc. This part determines the water absorption and performance of the sanitary napkin.
Bottom layer: PE leak-proof film to prevent liquid leakage, with hot melt adhesive on the outside for pasting.
Coating: The outer packaging of a single piece of sanitary napkin, commonly known as the quick and easy bag, can be printed with patterns, generally using cast film or non-woven fabric.
In terms of the amount of raw materials, the non-woven fabrics and anti-leakage films required for the surface and bottom layers are the largest; in terms of importance, the intermediate absorber has the highest material requirements, and high-quality SAP and fluff pulp still need to be imported.

Disposable products have high hygienic standards, and the production process needs to be strictly controlled. The quality control standards of leading companies in the industry are usually stricter than the existing national standards.
From the perspective of sales and financial indicators, the industry presents the following characteristics:
1. Relying on offline channels, online transaction volume has grown rapidly.
There are two main ways for manufacturers in the industry to enter the sales terminal:
①Distribution mode
Manufacturers and distributors sign distribution contracts to sell products to distributors at the distribution price. Distributors sell to sales terminals within the time limit and region agreed in the distribution contract, and sales terminals then sell to end consumers.
The final destination of the goods sold is mainly the shopping malls, small and medium supermarkets, convenience stores, daily chemical stores, grocery stores, etc. in the jurisdiction.
②Direct operation mode
Manufacturers sign sales contracts with KA customers (mainly hypermarkets, large chain supermarkets and other customers), and sell goods to KA by selling or consignment sales. Increase brand coverage.
In the above two models, foreign brand enterprises mainly sell their products through KA channels, while local brand enterprises usually have certain advantages in sinking sales terminals. high.
It is worth noting that the proportion of e-commerce sales of various sanitary napkin brands has increased year by year.

It can be seen that compared with offline channels, the gross profit margin of e-commerce is lower, which may be due to the fact that wholesale sales of e-commerce channels have lowered the price.
The growth of sales through e-commerce channels has also changed consumer habits, prompting women to shift from monthly purchases to one-time bulk stockpiling.
This change in consumption habits is bound to further prompt companies to adopt a mass-selling strategy. It's no wonder that the greetings of female friends after Double Eleven have become "Have you stocked up on sanitary napkins today?"
According to public data, the rankings of online and offline sales share are basically the same. "Sophie", "Hushubao" and "ABC" are not only the champions of offline sales, but also the overlords of online sales.
2. High industry concentration
my country's sanitary napkin industry is a highly concentrated industry. In 2016, the sales of the top ten manufacturers accounted for 82%.
Among the top ten companies, there are six local companies including Fujian Heng'an, Guangdong Jingxing, Guilin Jieling, and Chongqing Baiya. Among them, only Fujian Heng'an (Hong Kong stock 01044) is a listed company, and its "Seven Degrees Space" is the largest in China. Best selling sanitary napkin brand.
Although there are not many listed companies, in terms of market share, domestic sanitary napkins have reached the strength to compete with foreign consumer goods giants such as Unicharm (Japan), Procter & Gamble (US), Kimberly-Clark (US), and Kao (Japan).
3. High barriers to entry
Brand and capital barriers are high.
On the one hand, the replacement speed of disposable sanitary products is relatively fast, which requires manufacturers to invest a lot of money to purchase new production equipment or to technically transform existing equipment; More cautious, and it is difficult for new entrants to the industry to form a reliable and stable quality control system in a short period of time.
Channel barriers are high. For new entrants in this industry, dealer resources are relatively scarce resources. On the one hand, the initial investment cost of developing dealer customers and establishing trust relationships is high. On the other hand, for new entrants without brand accumulation, the channel's The management and control ability is also relatively poor, which is not conducive to market development.
4. High profit margins
The profit margin of sanitary napkins is generally higher than that of baby diapers and other adult hygiene products, and also higher than that of general paper products. According to public data, in 2016, the annual revenue of the sanitary napkin business under Hengan Group, the leader in sanitary napkins, was 6.5 billion, and the gross profit margin was stable at 72.6%.
5. The brand echelon is not obvious
At present, the price of sanitary napkins in the market is generally 0.5-0.9 yuan/piece. Even for ABC and Sophie, which are positioned in the mid-to-high-end market, the single-piece price fluctuates between 1.0-2.0 yuan/piece, and the price distinction is not obvious. Consumers pay more attention to product performance and brand reputation when purchasing.

We believe that this phenomenon is caused by the following reasons:
1. Sharing of upstream raw materials. At present, the raw materials of the sanitary napkin absorber are mostly polymer absorbent resin, wood pulp, fluff pulp, and absorbent paper, which overlap with the upstream of the paper industry and can realize resource sharing.
2. Sharing of downstream channels. These two categories are highly dependent on the characteristics of offline channels, which means that they can share channels such as hypermarkets, supermarkets, and convenience stores. The buyers are mainly female customers, and the overlap rate is extremely high.

The third category: new startups started on the Internet
As mentioned above, the existing sanitary napkin prices are not clearly differentiated. With the increase of income and the change of concept, there is still a lot of room for the mid-to-high-end market of sanitary napkins.
At present, investment and financing in this field are not frequent. We have selected several Internet sanitary napkin brands that have received financing in recent years and have received more attention.
Although the unit price is generally 2-3 times more expensive than traditional sanitary napkin brands, for Internet entrepreneurial brands that focus on improving service and user experience, the online sales method saves the distribution costs of layers of agents, which means more energy is put into products. design and quality control.
The products of these companies generally have the following characteristics:
1. Pay attention to the outer packaging and design sense

More designed packaging
Packaging with a sense of design and texture not only provides customers with aesthetic enjoyment, but also enhances the social attributes of the product. In the early days of its establishment, Light Life once defined gift boxes as "the first box of sanitary napkins bought by men", and used packaging upgrades to give products the attributes of gifts.
2. Product innovation and upgrading
Pure cotton has no allergy and no additives, higher absorption rate, and the purchase of more absorbent polymer materials is the common advertiser of all brands. In addition, NONOLADY's little black towel protects your sister's little wings with a patented appearance. Various brands are scrambling to upgrade their products and strive for higher quality.
3. Service and experience upgrade
Compared with selling sanitary napkins, Internet sanitary napkin brands are more like "warm men". Joke push, comic ip, menstrual reminder, packaged sales of services and products are a transformation of the sales model.
4. Focus on the creation of user communities and enhance interaction
Creating a female community is more conducive to enhancing user stickiness, such as the circle of people who protect your sister and the nono family of nonolady. This is an area that is difficult for traditional brands to penetrate and it is difficult to obtain feedback.
It is understood that Qing Life’s online sales exceeded 30 million in 2016, and the user repurchase rate was 33%; the average annual order of NONOLADY, which is positioned as a light luxury, is between 90 million and 100 million; after three rounds of financing, Huyoumei’s current turnover is 200-300 10,000, and basically achieve breakeven;
However, emerging brands should also consider whether the brand and reputation can continue to endorse the product once the mid-to-high-end market for online sales is saturated.

For local enterprises, their channel advantages and brand reputation accumulated over the years are quite mature, and they will also be in an advantageous position when they conquer vertical fields in the future.
The real problem facing this wave of Internet companies is how to deploy offline channels when the market and distribution channels sink to third- and fourth-tier cities. Otherwise, when the online traffic bonus is not available, they will face a real ceiling. At present, most of the new consumer brands have encountered major problems in channel sinking.
2.2 Are tampons a rising star?
After summing up the existing players, Xiaoqi wants to remind a new category - tampons.
Different from sanitary napkins, tampons are an insertable, new form of women's menstrual products. Let's look at a simple schematic.

According to netizens with experience, the cotton sliver is light and nonsensical. It is actually a very useful product. It can stand up to the water. In China, the sales of cotton sliver is 3.9 million US dollars in the huge sanitary napkin market. It seemed worthless in front of him. In Japan, where the market is more mature, only 10% of women choose to use tampons or use them together with sanitary napkins.
The main reasons may be the following:
1. East Asian women differ from Western women in their sexuality. Cotton sliver has been available in the West since 1933, and it has developed almost simultaneously with the sanitary napkin market. For Chinese women who have not gone through the transition period and directly entered the era of sanitary napkins, it is obviously difficult to overcome the existing usage habits with the insertion method.
2. The unit price of sliver is more expensive, and the cost performance is not high. The unit price of non-ducted tampons is equivalent to that of sanitary napkins. The price of more convenient and hygienic ducted tampons is generally more than three times the price of sanitary napkins, and the prices vary greatly.
3. Implicit risk of toxic shock syndrome (TSS). In fact, with the advancement of technology, modern sliver has been able to reduce this risk to 3 in 100,000, which is an extremely low probability event.
Compared with the Japanese market, value-added Chinese consumers are more receptive to new things. Obviously, there is still room for growth in cotton sliver sales. In this regard, the founder of the new Internet brand "Cotton Book", which focuses on the research and development of tampons, believes that the tampon will usher in its outbreak within three years.
Not only did emerging brands such as Cotton Book, Fei Mi, and Yum Sliver smell the business opportunity of cotton sliver, but the fast-moving consumer goods giants who have established a firm foothold in the sanitary napkin category are also eager to try it.
In early 2017, Procter & Gamble's tampax sliver was officially launched in China. As the tampon with the largest market share in the United States, this is already the third attempt of tampax to enter China (the last time it landed in Nanjing in 1998). Eujani's well-known brand "Sophie" also launched tampon products.
At the same time, there are also many manufacturers who think that sliver is a very small category and is not worthy of development and promotion.
In general, due to differences in culture and habits, the ceiling of the category of sliver may also be very low. The fact that tampons want to conquer the market of feminine hygiene products means that huge investment in marketing is still needed for consumer education.
The O.B. sliver that entered China in the 1990s actually had a short burst. The smiling and confident girl on the sliver advertisement showed consumers a different female life in the new era, causing a backlash from women in that era.
However, after a short burst period, O.B. sliver entered a tepid embarrassing situation. In recent years, the gradual rise of feminism may have created a new opportunity for tampons.