Babies are a blessing. They bring joy to our world and purpose to our lives. However, they also have a tendency to make things a little bit messy from time to time.
Hence, parents of newborns tend to spend inordinate sums on diapers and baby wipes. Unfortunately, keeping your baby clean and dry is about to become a whole lot more expensive. The two biggest manufacturers of diapers and baby wipes have recently announced plans to hike prices on undergarments for the infant set.
After reporting a 9% decline in profit this week, Kimberly-Clark (NYSE: KMB ) announced its intent to raise prices on Huggies diapers and wipes 3% to 7% in the near future. Procter & Gamble (NYSE: PG ) , maker of Pampers and Luvs, is following suit with a 7% increase on Pampers prices, and 3% on wipes.
What's it mean to you?
If you're a new parent (as I am), or a parent-soon-to-be (as I also am), now might be the time to stock up and save on this family essential, by buying diapers in bulk ahead of the price hike. According to The Wall Street Journal, Kimberly and P&G feel a need to raise prices to keep up with soaring commodity costs on wood pulp, resin, and other diaper "inputs." They also feel insulated from a consumer backlash, since research shows parents are unwilling to switch brands to save money when their baby's comfort is on the line.
An alternative, therefore, would be to prove the companies wrong and switch to cheaper brands. Costco (Nasdaq: COST ) , BJ's Wholesale (NYSE: BJ ) , and Sam's Club from Wal-Mart (NYSE: WMT ) all offer high-quality alternatives to the major diaper brands. But parents unwilling to switch have options, too, such as subscribing to Amazon.com's (Nasdaq: AMZN ) "Amazon Mom" service, which offers free shipping on baby products -- and periodic sales of the major diaper brands at cheaper-than-retail prices.
Speaking of which, if you're a parent and an investor, now might be a good time to begin hedging against the price hike in other ways. You can reduce the pain by playing both sides of the table, buying stock in Kimberly or P&G so that you'll essentially pay higher prices to yourself. Now might also be a good time to stock up on warehouse store stock, or Amazon.
With any luck, the high cost of bringing up baby may help you to clean up as well.