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KEY WEST, FLORIDA — Throughout modern history, parents have had one real choice when it comes to disposable diapers: plastic.
Single-use products, typically made from fossil fuels like petroleum, can take hundreds of years to decompose, becoming the third-largest consumer item in U.S. landfills, according to the Environmental Protection Agency.
Additionally, they are not as breathable as other materials, potentially making accidents like diaper rash more common.
However, plastic diapers from major brands like Pampers, owned by Procter & Gamble, and Huggies, owned by Kimberly-Clark, continue to dominate the market. Amrita Saigal, founder and CEO of Kudos, is trying to change that.
The Massachusetts Institute of Technology graduate, mechanical engineer, and “Shark Tank” alumna has developed a sustainable diaper that uses little plastic, is lined with 100% cotton, and uses other degradable materials like sugarcane and trees, she told CNBC.
At the end of the month, it will be the first diaper of its kind to hit retail stores when it launches in about 375 Target locations nationwide.
“I’m very excited to partner with Target to make history as the first disposable diaper lined with 100% cotton to hit retail shelves,” Saigal said in an interview with CNBC. “It’s a very big deal for us, especially since Target doesn’t have many brands.”
Innovation and Disruption
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 investments from Precursor Ventures, Xfund, and Oversubscribed Ventures.
In the past 12 months, it has sold over 20 million diapers, and sales have more than doubled.
Saigal says she has always been fascinated by consumer packaged goods and has spent her career devising ways to redesign everyday products, like sanitary pads and diapers, in an effort to disrupt an industry dominated by corporate powerhouses.
Her goal? To reduce the world’s reliance on fossil fuels by creating new supply chains and developing sustainable products that are as effective as, or better than, their competitors.
“I won’t launch a product that isn’t on par with or better than Pampers,” Saigal said.
“Are there eco-friendly alternatives? Yes, but they don’t work, and when it comes to a diaper, we can’t have something that doesn’t work. If you have a leak, you have a leak, your parents are already sleep-deprived. They need things that work. They’re not willing to sacrifice performance for eco-friendliness.”
After three years of research and development, Saigal has created a diaper that can absorb much more liquid than competitors like Pampers Pure Protection, Huggies Special Delivery, and Honest diapers, according to independent testing by Diaper Testing International.
The “DoubleDry” Technology
Saigal has also developed the patented “DoubleDry” technology, which involves inserting two layers into the diaper instead of one, allowing it to absorb moisture.
“If you just took out the plastic 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,” Saigal said. “How do you quickly get that urine and poop out, and then pass it through the layers of the diaper and distribute it evenly so that your baby’s bottom feels dry? That’s really what our innovation is about.”
Kudos is much smaller than its more powerful competitors, but Saigal said the company’s size has uniquely positioned it to develop new cotton supply chains and help suppliers grow with the company.
“For a company like P&G to do this, they would have to spend hundreds of millions of dollars to reconfigure their equipment and be able to do it… it’s really hard, with their current supply chains, to allow natural materials to work in their current process,” said Saigal, who worked for P&G as a design and manufacturing engineer after graduating from MIT.
The Diaper Economy
Kudos faces a daunting landscape.
Successful brands that start by selling directly to consumers and then move into retail can struggle with high inventory costs and onerous payment terms that come with them.
Hello Bello, a hypoallergenic and sustainable diaper brand founded by celebrity couple Kristen Bell and Dax Shepard, filed for bankruptcy in October while struggling to develop its supply chain after starting to sell at retailers like Clothing Store.
In recent years, several other consumer goods companies and direct-to-consumer brands have faced similar fates after entering a funding environment that prioritized growth over profitability.
“In the golden age of DTC, it was like, ‘Don’t worry about unit economics now, right?’ Like, just revenue growth, revenue growth, revenue growth, and then once you get to $100 million, $200 million in revenue, then we figure out how to make it profitable,” said Saigal, who founded her company in 2021 and secured funding from “Shark Tank” host Mark Cuban and Shark host Gwyneth Paltrow in 2023.
“I don’t think that model works anymore,” she continued. “It’s like grow slower but make unit economics work from day one. I think the brands that are going to succeed now have to have a very, very tight control on their numbers and their unit economics from the beginning.”
In the next year, Saigal’s number one priority for her business is to reach profitability, and to get there, she is keeping her team lean and strategic with the capital she’s using to pay for inventory ahead of its launch at Target. She has also had to walk a fine line when it comes to pricing. Her products are more expensive to make than her competitors, but if she prices them too high, she risks alienating potential buyers.
Currently, parents can buy Kudos for between 41 and 70 cents per diaper, depending on the size. That compares with a box of Pampers Pure Protection, which costs between 34 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 that as low as possible,” Saigal said. “I’m really interested in being premium but affordable. That’s exactly what I want to do so that we’re accessible to as many people as possible and the cleanest materials aren’t out of reach.”
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