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With birth rates tumbling in China, the baby care market is an unlikely source of growth for Procter & Gamble.
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The company has moved upmarket with premium products, a strategy that’s working wonders.
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This success offers a blueprint for the company’s other businesses as it looks to reinvent itself.
China’s birth rate was 5.6 births per 1,000 people in 2025, down nearly 13% from 2023. With just 7.9 million babies born last year, China’s fertility crisis is only getting worse. For comparison, the U.S. birth rate was 10.7 babies per 1,000 people in 2023.
For consumer goods giant Procter & Gamble (NYSE: PG), the Chinese baby care market doesn’t appear to be a great growth opportunity at first glance. However, the company has found a way to grow its China baby care business by a double-digit percentage over the past 18 months while increasing its market despite a collapsing birth rate. The secret? Premium products that mesh with thousands of years of Chinese culture.
According to Procter & Gamble CEO Shailesh Jejurikar during the earnings call on Thursday, “Chinese parents want only the best for their baby. Softness and comfort in addition to dryness.”
Procter & Gamble turned to silk, a material with a luxurious reputation and a multi-thousand-year history as a status symbol, to craft its Pampers Prestige line of premium diapers. The company claims that Pampers Prestige is the only leading brand that uses real silky ingredients.
Premium disposable diapers account for 35% of the Chinese diaper market, according to Alibaba, and sales are growing at nearly quadruple the rate of standard disposable diapers. The overall Chinese diaper market is expected to grow by 5.7% annually through 2032, but the premium segment is almost certain to grow faster. Alibaba also found that Chinese parents are generally willing to pay 15% to 20% more for diapers that feature hypoallergenic materials.
Instead of going after volume, Pampers Prestige is an example of Procter & Gamble shifting gears to pursue the best growth opportunity in an otherwise sluggish market. Jejurikar pointed to Pampers Prestige as a template for how the company is leaning into innovation to boost sales.
Jejurikar said that Procter & Gamble is beginning a long-term reinvention, with innovation set to play a starring role. The company will use productivity gains to fund innovation and demand creation, while doing its best to mitigate cost headwinds from tariffs and inflation. Procter & Gamble will also leverage its trove of consumer data to drive the business in the right direction.
