Kudos diapers founder Amrita Saigal with her daughter
Courtesy: Congratulations
Throughout modern history, parents have only had one real choice when it comes to disposable diapers: plastic.
Disposable products are typically made with fossil fuels like oil and can take hundreds of years to break down, making them the third largest consumer item in US landfills, according to the Environmental Protection Agency.
Additionally, they are not as breathable as other materials, which could make incidents like diaper rash more common.
Also, plastic diapers from big brands like Procter & Gamble– owned by Pampers and Kimberly-ClarkProprietary Huggies continue to dominate the market. Amrita Saigal, founder and CEO of Kudos, wants to change that.
The MIT graduate, mechanical engineer and “Shark Tank” alum developed a sustainable diaper that uses little plastic but is lined with 100 percent cotton and incorporates other degradable materials like sugar cane and trees, she tells CNBC.
Later this month, it will be the first diaper of its kind to land in retail stores when it goes on sale in about 375 Target locations across the country.
“I am so excited to partner with Target to make history as the first 100% cotton-lined disposable diaper to hit retail shelves,” Saigal said in an interview with CNBC. “It’s a really big deal for us, especially since Target doesn’t carry a lot of brands.”
Panes Congratulations
Courtesy: HatchMark Studio
In the three years since its launch, Kudos has raised more than $6 million in funding. It closed a $3 million round last month with investment from Precursor Ventures, Xfund and Oversubscribed Ventures.
In the last 12 months, it has sold more than 20 million diapers and increased its sales by more than 100%.
Disruption through innovation
Saigal says she has long been fascinated by consumer packaged goods and has spent her career looking for ways to redesign everyday products like sanitary napkins and diapers in an effort to disrupt an industry long dominated by corporate superpowers.
Her goal? Reduce the planet’s dependence on fossil fuels by creating new supply chains and developing sustainable products that are just as efficient – if not better – than competitors.
“I’m not launching a product that’s not on par or better than Pampers,” Saigal said.
“Are there eco-friendly alternatives? Yes, but they don’t work and when it comes to diapers, we can’t have something that doesn’t work. You have one blowout, one leak, your parents are already sleep deprived. They need things that work. They don’t they are willing to compromise performance to be environmentally friendly.”
After three years of research and development, Saigal has developed a diaper that can absorb far more liquid than competitors such as Pampers Pure Protection, Huggies Special Delivery and Honest diapers, according to independent tests conducted by Diaper Testing International.
Pampers did not respond to a request for comment. He flatly declined comment.
A spokesman for Kimberly-Clark, which owns Huggies, told CNBC he could not comment because he had not seen the study conducted by Diaper Testing International.
Saigal also developed a proprietary “DoubleDry” technology that brings two layers to the diaper instead of one, allowing it to wick away moisture.
“If you just took the plastic out and replaced it with cotton, your diaper would fail miserably because what would happen is your baby would pee and all the urine would pool and then your baby’s bottom would be wet,” she said. . Saigal. “How you can quickly remove that urine and poop and then pull it through the layers of the diaper and then disperse it evenly so your baby’s bottom feels dry. So that’s our innovation.”
Kudos is much smaller than its biggest rivals, but Saigal said its size has made the business uniquely positioned to create new cotton supply chains and help suppliers grow alongside the company.
“For a company like P&G to do that, you’re talking … hundreds of millions of dollars in order to retrofit their equipment to be able to do that … it’s really difficult with their existing supply chains to be able to allow natural materials to work in the current their process,” said Saigal, who worked for P&G as a design and manufacturing engineer after graduating from MIT.
Even sourcing natural materials to use instead of plastics would be challenging for larger companies because of their scale, Saigal said. Suppliers like cotton farmers tend to have buyers and partners locked in before they grow the requested materials, and since there isn’t yet mass demand for cotton from diaper manufacturers, those supply chains don’t yet exist at scale, he said.
As more smaller brands work with natural materials suppliers to develop new supply chains, Saigal hopes that larger brands will adopt natural materials more widely over plastic, which could lower the price of these materials and subsequently make plastics more expensive.
“When does the mass adoption of natural materials really happen? The reality is, when natural materials become cheaper than plastics,” he said.
Diaper economics
Dos faces a daunting scale landscape.
Busy brands that start out by selling direct to consumers and then move into retail can face difficulties due to the high cost of inventory and burdensome payment terms that come with it.
Hello Bello, a hypoallergenic, sustainable diaper brand founded by celebrity couple Kristen Bell and Dax Shepard, filed for bankruptcy in October as it struggled to grow its supply chain after starting to sell to retailers such as Walmart.
In recent years, many other consumer products companies and direct-to-consumer brands have faced a similar fate after emerging in a funding environment that prioritized growth over profitability.
“In the heyday of DTC, it was like, ‘Don’t worry about unit finances now, right?'” Like, just top-line growth, top-line growth, top-line growth, and then once you hit $100 million, $200 million dollars in revenue, then let’s figure out how to make this profitable,” said Saigal, who founded the company in 2021 and secured funding from “Shark Tank” host Mark Cuban and Shark guest Gwyneth Paltrow in 2023.
“I don’t think that model works anymore,” he continued. “It’s like they’re growing more slowly, but the unit economics work from day one. I think brands that are going to be successful now have to have a very, very tight lock on their numbers and their unit economics from the beginning. ”
In the coming year, Saigal’s No. 1 priority for her business is to reach profitability, and to get there, she’s keeping her team lean and strategic with the capital she’s using to pay for her pre-launch stock in Target. It also had to walk a fine line when it came to pricing. Its products are more expensive than its competitors, but if the price is too high, it risks alienating potential buyers.
Currently, parents can purchase Kudos for anywhere from 41 cents to 70 cents per diaper, depending on size. That compares to a box of Pampers Pure Protection, which runs between 34 cents and 75 cents per diaper, according to a listing on Target.com.
“We’re a little more expensive just because our raw materials are more expensive, but I’ve tried to keep it as minimal as possible,” Saigal said. “I’m so interested in being premium, but accessible. That’s exactly what I want to do, so that we can be accessible to as many people as possible and the purest materials are not out of reach.”
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank,” featuring Mark Cuban as a panelist.
