By Natasha Khan | Photography and video by Caleb Alvarado for WSJ
Scientists and engineers at Kimberly-Clark's Neenah, Wis., facility spent months huddled around a Huggies Snug & Dry diaper.
They analyzed every layer and fiber. What could they add? What could they lose? The team had received a directive from up top that they were to upgrade the company's most affordable diaper line, one of its most popular franchises in America.
But there was a catch: They had to do it without raising prices.
Kimberly-Clark Chief Executive Mike Hsu is turning on its head a fundamental strategy of consumer-product makers in America. Companies have always tried to add features to their products so they could convince us to pay more for them. Less-expensive items meant fewer frills, often store brands.
He wants his brands -- Huggies, Kleenex tissues and Scott paper towels -- to be the least-expensive items on the shelf while also advertising new features.
While the wealthiest 10% of Americans account for almost half of consumer spending, Hsu sees a huge opportunity to increase market share among the 90% of people who spend the other half.
The scientists and engineers tasked with upgrading Huggies code-named the project "Buff Baby." They scrutinized everything from consumer complaints to supply chains to potential new materials. One group flew to China to learn from colleagues there, since Huggies had been through many more iterations in China's hypercompetitive diaper market.
The product of their months of work -- Huggies Snug & Dry -- debuted last February. In its first year on the market, it helped Huggies sell more diapers, grab more market share and was one of the driving forces behind a 13.1% jump in company profit last quarter.
A 128-pack of Size 1 Huggies Snug & Dry diapers retails for about $25 at Walmart and Target. It's considered a budget-friendly option -- more affordable than more premium-tier diapers like Huggies Little Snugglers, Pampers Swaddlers or Coterie's The Diaper. But it's pricier than store brands. Target, for example, sells a 168-pack of Size 1 diapers under its own brand for about the same price.
Now, the template of how the team made a softer, affordable diaper is ricocheting across the $33 billion company. Hsu is hailing it as the model he wants everyone else at Kimberly-Clark to learn from, as he pushes the company to implement his strategy of delivering -- as he has said over and over -- "the best products at the lowest cost." When teams reply with "got it, you want to lower costs," he's been known to correct them with: "not lower. Lowest."
American consumers are feeling squeezed after years of stubborn inflation. The K-shaped economy is splitting American shoppers into bargain hunters and premium spenders. To navigate this terrain, some companies plan to lower prices, while others have focused on making pricey products worth the price. Many businesses are still struggling to boost volume, a closely watched gauge, and have instead been relying on rising prices to boost profits.
"We have to earn the volume," said Hsu. "That's the game for us."
In November, Hsu surprised the industry and investors by announcing that his company would purchase Kenvue, the maker of Tylenol painkillers, Listerine mouthwash and Neutrogena skincare products, for more than $40 billion. He told Kenvue executives in initial meetings that Kimberly-Clark's strategy is one that they can "plug and play" across Kenvue's well-known brands.
The U.S. disposable diaper market has been shrinking for some time. It declined 1.7% to $5.8 billion in the 12-month period ended Jan. 25, according to market-research firm Circana. The birthrate in the U.S. reached record lows in recent years as Americans in higher income brackets have fewer children.
Two diaper brands dominate: Procter & Gamble's Pampers brand has long been the leader, while Huggies is a close second. P&G also has a Luvs brand that competes in the lower-price tier of the market.
A disposable diaper is a study in layered engineering. It has three main components.
The chassis forms the framework of the diaper, and the part of it that sits against the baby's skin needs to be soft and nonirritating. The cuffs and waistbands that form a snug seal around a baby's legs and waist are called the gasketing. And then, of course, there is the absorbent core -- which holds what scientists refer to as the "insult."
The task for the Snug & Dry revamp fell to a group of K-Cers -- as company employees call themselves -- at a research facility in Wisconsin. The team was assembled from across the company, roping in workers who specialized in materials, process and assembly, among others.
There were bulletin boards, giant Post-It notes, timelines. Meetings could get heated as colleagues debated the way forward, said Angela Johnston, who heads up product development globally for Huggies. The team used a silly and playful logo for "Buff Baby" -- an image of a baby with raised arms, pressing tiny dumbbells, with a serious expression. That logo was on internal folders and materials and in internal presentations.
Some days, scientists would show the team gathered around the table ripped-up innards of diapers they were analyzing. Other days, they would have a good lead on a new material only to find out it couldn't be manufactured to scale. It was a group powered by caffeine, Johnston said, and their coffee came in handy when they needed a liquid prop to do quick demos with the prototypes to test their absorbency.
The "Buff Baby" team benefitted from another effort at Kimberly-Clark that was unfolding at the same time: The company has been looking to streamline its global operations, so that lessons learned in one part of the world can more easily be implemented in other parts. Those process changes across the company meant that the Snug & Dry launch -- which took lessons from teams in China -- was one of the fastest to market in the company's history.
Babies sit, crawl and twist. They generate heat and friction. So the group also used a number of baby-torso models -- which they named after videogame characters -- that can walk, crawl and expel liquids and solids to make sure that the new diapers could draw out the liquid and that the liquid would then stay put within its layers.
After many rounds of bench and consumer testing, and after receiving positive feedback from test consumers, the team was ready to go to market with their product.
When Huggies re-launched Snug & Dry last year, it had material that felt softer, a stretchier fit, upgraded absorbency technology and a revamped shield in the back to help prevent leaks from behind -- what they call "a blowout blocker."
It met the mandate: They didn't have to raise prices. And in the long run, as the company reworks its manufacturing processes, the company says the new diaper may end up being cheaper to make than older models.
After Johnston presented the upgraded diaper to a retailer and received praise for the changes, she called the team from the airport to report back on speaker phone. The team cheered.
Hsu, 61, became Kimberly-Clark's CEO in January 2019, after a two-year stint as the company's chief operating officer. Prior to that, the Maryland native worked at Kraft Foods, H.J. Heinz and Booz Allen Hamilton.
In the summer of 2023, as U.S. inflation started to accelerate, Hsu sat down with his team to study the state of the American consumer and the pricing on the sorts of essentials that Kimberly-Clark sells. Savings rates were falling, and prices for all sorts of products were up. It was apparent, he said later, that many consumers -- including Kimberly-Clark's -- were going to be feeling the pinch.
"Premium spending would continue to grow gangbusters," Hsu said. "But equally notable was that for households that earn $100,000 or below, how they spend their money would be more and more important."
So the company made a shift. It had always looked for ways to improve its products, but now it would focus on two things: truly game-changing innovations, and making sure that many of these improvements would be cost-effective enough to work even in its lowest-priced products.
It sounds simple enough, but it hasn't been the strategy that the biggest companies in the sector have been pursuing. For over a decade, many consumer companies got obsessed with going upmarket, said Nik Modi, a retail and consumer-products analyst at RBC Capital Markets, because it was easier to raise prices -- and boost profit margins -- at the premium end of the market. Kimberly-Clark has "a way to take some of their higher-end innovation technology and lower the cost of it enough that they can sell it at the lower price point and still not kill their margins."
Innovating at the lower end of the market is important to prevent customers from going to an even cheaper product, said Lauren Lieberman, a consumer-products analyst with Barclays. "For households with very young children, diapers are a big expense," Lieberman said, "so it's an area that is subject to trade-down risk as consumers manage their wallet."
Rivals are also adjusting their diapers. P&G said in its October earnings call that it had made upgrades in its super premium, premium and value-tier diapers, and were about to upgrade its medium tier. It was studying how to better compete after its baby-care division was not "delivering at the level that we want them to deliver," Andre Schulten, P&G's chief financial officer, said on the call.
P&G said in a statement it has "a relentless focus on consumer insight-driven innovation -- understanding what parents need and delivering superior products, packaging and value."
Kimberly-Clark is in the midst of investing $2 billion in U.S. manufacturing sites, including in Warren, Ohio, that will help it lower production costs by being more automated and cutting the miles its products need to travel by 22%, said Russ Torres, Kimberly-Clark's chief operating officer. Now, Hsu is deploying many members of his "Buff Baby" team to other projects -- with their own code names -- where they are tasked with bringing the same approach that led to the Snug & Dry launch. The company will only say product lines that could be targets include feminine and adult care, and baby and child care.
Write to Natasha Khan at natasha.khan@wsj.com
(END) Dow Jones Newswires
March 20, 2026 12:00 ET (16:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
