P&G price hikes not deterring consumers as consumption remains stable; CEO happy with last quarter's flat market share

Lorena Madrigal

LOS ANGELES , November 1, 2011 (Industry Intelligence) – Even after Procter & Gamble Co. led industry with price hikes, consumption remains stable, Advertising Age reported Oct. 27.

Chairman and CEO Bob McDonald said he was happy the price hikes hadn’t really affected the company’s marketshare, which was flat in the last quarter as gains and stability in some markets offset the slower North American and Western European markets.

According to McDonald, the stable stream of consumption is due to hard-hit consumers that remain committed to value products as well as a group of consumers that are doing well despite the economic recession and are trading up.

Despite a fall in consumer confidence in August, the company reported record sales in September, suggesting spending is not weakening, the company’s CFO Jon Moeller said, Advertising Age reported.

During the last quarter, the company’s fabric and home care products saw a 1% fall in global volumes and mid single-digit decrease in developed markets, the biggest drop in volumes for the company, after prices rose by 5%.

McDonald believes some volumes loss is due to competitors, such as Church & Dwight Co. and Reckitt Benckiser, not following P&G’s lead in increasing prices.

According to Moeller, the company is not changing its earnings forecasts and will be increasing its marketing spending in line with this year’s sales.

The company is also planning to further raise prices in early 2012 to offset currency changes and commodity costs, McDonald said.

The primary source of this article is Advertising Age, New York, on Oct. 27, 2011.

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