A06-97-0002

Crosswell International
It is August 4, 1995, and the Mathieux brothers, Doug and Geoff, were concluding a summer-long effort of developing the Brazilian market for Crosswell International (U.S.).
Crosswell’s president and CEO, Hector Lans, is convinced that Precious Ultra Thin Baby
Diapers will be a big seller in Brazil. In their role as brokers for Crosswell, the Mathieuxs have been exploring a number of different distribution channels in the Brazilian market. To date, the distributor response to Precious diapers has been enthusiastic, particularly in light of Precious diapers’ superior quality compared to locally manufactured alternatives. The problem, however, is the price.
Brazilians base many purchasing decisions — at least in regard to disposable diapers
— on cost, not on quality. The Mathieuxs find that distributors do not believe they can compete in the market with the relatively high prices offered by Crosswell, even with higher quality diapers. After much debate over how to improve the price competitiveness of Precious diapers, the Mathieuxs believe they may have found a solution. Their proposal is to combine extended credit terms to local distributors with Brazil’s high domestic interest rates to effectively lower the diapers’ price to Brazilian consumers.

The Brazilian Diaper Market
Until the latter part of the 1980s, most Brazilians had never heard of a disposable diaper, and not surprisingly, the disposable hygiene market in Brazil was virtually non-existent. By
1995, however, the personal care market was booming. This growth was largely a result of new-found economic stability and a growing middle class. As both the middle class and educational levels about hygiene expand, the personal care market should also expand.
Disposable diapers were first introduced in Brazil in the mid-1980s by U.S.-based multinational Johnson and Johnson (J&J).