Costco to Change Diaper Suppliers

2025-01-18 21:37

According to multiple media outlets, Costco is changing suppliers for its Kirkland brand of baby diapers. Beginning next month, the big box retailer will use private label specialist First Quality for its store brand diapers.

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The shift comes as Kimberly-Clark has publicly expressed its intention to move away from lower margin private label business. In October, CEO Mike Hsu said he expected the company's private label sales to represent 2% of sales next year, down from 4% this year. Additionally, CFO Nelson Urdaneta said that the company’s exit of private label businesses, “allows us to dedicate our capacity and our investments to our own technologies and brands to differentiate them.”

First Quality, which also makes Cuties diapers along with paper towels and toilet paper, hasn’t disclosed the arrangement with Costco. The company is currently underway with a large-scale investment at its plant in Macon, GA, announced in May, which will increase manufacturing capacity by 50%. The investment, which includes a new manufacturing facility, new diaper manufacturing lines, new training pant lines and a new state-of-the-art automated warehouse facility is expected to be completed by June of 2025.