Parents Beware: It's a Diaper Emergency

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.

Costco and Wal-Mart are Motley Fool Inside Value picks. Amazon.com and Costco are Motley Fool Stock Advisor recommendations. Wal-Mart is a Motley Fool Global Gains choice. Kimberly-Clark, Procter & Gamble, and Wal-Mart are Motley Fool Income Investor selections. Motley Fool Options has recommended a diagonal call position on Wal-Mart. The Fool owns shares of Costco, and Wal-Mart.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. Check out his latest stock recommendations on Motley Fool CAPS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 26, 2011, at 11:39 AM, rolpres wrote:

    Dealing in doo-doo. It is a little like buying GM or Citigoup

  • Report this Comment On April 26, 2011, at 2:33 PM, Erin1679 wrote:

    OR, You could invest in cloth diapers and use them over and over, with multiple babies....save money, keep garbage out of landfills, and keep chemicals off of your child's reproductive parts.....

  • Report this Comment On April 26, 2011, at 2:36 PM, met631 wrote:

    Yes... Cloth is probably your best bet! Don't buy something you're just going to throw away!!!! Duh!

  • Report this Comment On April 26, 2011, at 2:42 PM, stlmom wrote:

    Cloth diapers, people! They've come a long way from diaper pins, some of them are formed just like disposables, Velcro and all - you just put them in the washer! Stop paying for something that you're just going to throw away - you're wasting money AND ruining the environment for your children!

  • Report this Comment On April 26, 2011, at 2:49 PM, alichaptx wrote:

    Duh. Cloth diaper, people! I spent about $200 before my son was born on cloth diapers and wipes and a couple wet bags. We plan to use these same diapers on any future kiddos too. We only do 2 extra loads of laundry a week. It's really not that bad. Do it!

  • Report this Comment On April 26, 2011, at 2:51 PM, clothdiaper wrote:

    Come on people-Cloth Diaper and save your money!!! In 1 year of cloth diapering I have spent less than $200 total and still am using those diapers for year #2...and any future babies...These are not your mom's droopy butt diapers with pins people!!! Check them out before you start stocking up on Pampers or Huggies!!!

  • Report this Comment On April 26, 2011, at 2:53 PM, daisylove112210 wrote:

    Yep, cloth diapers are the answers. We've been using cloth from birth to 5 months and plan on doing it to potty training. I've spent about $500 on cloth diapers and cloth wipes and will not have to spend another penny on this child or the other children I will have one day. Saving money and the earth feels great! (and it's easier than you think, promise. My husband even likes it ;)

  • Report this Comment On April 26, 2011, at 3:13 PM, TMFDitty wrote:

    Psst! Shh! Don't tell 'em that until I have a chance to score all the cheap diaper cover deals on eBay!

    ;)

    TMFDitty

  • Report this Comment On April 26, 2011, at 4:08 PM, hesaberserker wrote:

    quote from article: "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."

    This statement completely misses the point. K-C and P&G aren't raising prices in order to increase profit or benefit shareholders, it's due to the inflation-fueled increase in the cost of raw materials. The extra $ we'll be paying for diapers is not going to be increasing the value of anyone's K-C or P&G stock.

  • Report this Comment On May 07, 2011, at 4:32 AM, angie3197 wrote:

    A consumer can choose to pull themselves out of this diaper emergency by making the switch to cloth diapers.

    It's really not gross at all, saves money (yes, including the extra two loads of laundry you do in a week), and is overall better for your baby.

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