Posts tagged with "Procter & Gamble"

Consumer wallets ‘spring a leak’ as prices soar on diapers, kitty litter, and toilet paper

February 12, 2019

Most of us cut back on everything but the essentials when household prices go up, but our budget remains the same. However, according to a February 10 report by The Wall Street Journal, the cost of staples—including such fundamentals as diapers and cat litter—is expected to increase in 2019, leaving us little choice but to ante up.

Producers of household products, from toilet paper to bleach, are set to raise prices again this year after already hiking prices in 2018, hoping to offset higher commodity costs and boost profits, the financial news outlet says.

New Jersey-based Church & Dwight already has increased prices for about one-third of its products, including Arm & Hammer cat litter and baking soda, and some OxiClean cleaning products.

“The good news is that competitors are raising [prices] in those categories as we speak,” Church & Dwight CEO Matthew Farrell said on a conference call last week, during which the company reported higher quarterly sales and lower profits.

What he left out of that statement to financial analysts was that it was good news for the company and its stockholders—but not for America’s consumers.

The company is now discussing more price increases with retailers, including for personal-care products, Farrell told analysts Tuesday. Those brands include Nair, Arm & Hammer Toothpaste, Orajel, Simply Saline, Waterpik, and Viviscal, among others.

Other household names that are planning to release similarly “good” news, according to the Journal, include Procter & GambleColgate-Palmolive, and Clorox, which are raising prices in response to higher costs of raw materials and transportation, as well as unfavorable foreign-currency swings.

For much of the past decade, the Journal notes, price cuts have been far more common than price increases as U.S. companies were mostly reluctant to test consumers’ spending power and brand loyalty in a fragile economic recovery.

When companies tried to raise prices, “they better have had a uniquely strong innovation or be willing to lose market share to competitors,” Sanford C. Bernstein analyst Ali Dibadj told the news outlet.

Adding to the challenge of raising prices is that more shoppers have been switching to store-branded paper towels and discount detergents, or opting for online upstarts such as Dollar Shave Club.

Traditional brands also have been under pressure from big-box retailers such as Costco and discounters like Walmart Inc. and Amazon to keep prices low—pushing the manufacturers to focus on lowering costs in their supply chains or pare back advertising.

Finally, after failing to see success when they tried to combat weak demand by lowering prices, the industry’s biggest player, P&G, shifted its course last summer, announcing it would charge more for several of its brands—and several rivals followed suit, the Journal reports.

The recent price increases are largely playing out in the companies’ favor, Wells Fargo Securities analyst Bonnie Herzog told the Journal. Sales volumes of household and personal products in the United States. declined 1.4% in January, according to Bernstein’s analysis of data from Nielsen. Dollar sales of those products rose 0.7% in the period, Bernstein said, indicating that the price increases, on balance, are padding the bottom lines at consumer-goods companies.

How consumers will deal with the price hikes long-term remains to be seen.

Research contact: aisha.al-muslim@wsj.com

Consumer brands to test refillable containers, delivered and returned in ‘milkman-style mode’

January 25, 2019

Fill ‘er up: The world’s biggest producers of shampoo, detergent, and packaged food will test selling their products in reusable containers—adopting a “milkman-style mode” to address mounting concerns about plastic waste, The Wall Street Journal reported on January 24.

Procter & Gamble, Nestlé, PepsiCo, and Unilever are among 25 companies that, next summer, will try selling some products in glass, steel, and other containers designed to be returned, cleaned, and refilled.

While critics already are questioning high costs and entrenched consumer behavior will tank the project, the companies say that such efforts will reduce waste from single-use packaging. It also could represent an effective way to woo eco-conscious consumers, glean data, and foster brand loyalty.

“I sometimes wonder if it’s a fair accusation that we’re in the branded litter business,” Unilever Chief Executive Alan Jope  said at a conference on January 22, the Journal reported, adding that the company must do more on plastic waste. “That’s what people care about right now.”

Unilever is known for its food and refreshment brands (Breyers, Hellmann’s Knorr, Lipton), home care solutions (Domestos toilet bleach), and beauty and personal care products (Axe, Dove, Vaseline).

The company, based jointly in London and Rotterdam, will sell nine brands in refillable containers as part of the initiative, which will be run by Trenton, New Jersey-based recycling company TerraCycle—and will start with 5,000 shoppers in New York and Paris in May, the Journal reports. The pilot will extend to London later this year and cities including Toronto and Tokyo next year, according to TerraCycle.

Unilever estimates that a refillable steel container for its Axe and Dove stick deodorants will last eight years—long enough to prevent the disposal of as many as 100 traditional deodorant packages.

Refillables once dominated industries such as beer and soft drinks but lost out to convenient, affordable single-use containers. In 1947, refillables made up 100% of soft-drink containers by volume and 86% of beer containers, according to the Container Recycling Institute, a nonprofit. By 1998 those figures dropped to 0.4% and 3.3%, respectively.

While a handful of entrepreneurs have founded businesses that sell shampoo and detergents in refillable containers, and some grocery stores sell in bulk to consumers who bring their own containers, the practice is niche, according to the Journal.

“From a philosophical point of view, we have got to lean in and learn about this stuff,” Simon Lowden, president of PepsiCo’s Global Snacks Group, who also leads a task force on plastic waste, told the business news outlet. “People talk about recyclability and reuse and say they’d like to be involved in helping the environment, so let’s see if it’s true.”

PepsiCo will sell its Tropicana orange juice in a glass bottle and Quaker Chocolate Cruesli cereal in a stainless-steel container as part of the trial.

Cincinnati-based Procter & Gamble will sell ten brands—including Pantene shampoo in an aluminum bottle, Tide laundry detergent in a stainless-steel container , and an Oral B toothbrush with a durable handle and a replaceable head.

“It’s really about a new delivery system and making sure once people are hooked into this they stay with the product,” P&G’s Chief Sustainability Officer Virginie Helias told the newspaper.

Shoppers whom the companies select for the trial will be able to order hundreds of products—including Nestlé’s Häagen-Dazs ice cream and Clorox’s wet wipes—from a website for home delivery. Products will arrive in a reusable tote with no extra packaging. Once finished, users schedule a pickup for empty containers to be cleaned and refilled.

Participating consumers can sign up for a subscription-based service that replenishes products once empty containers are returned. TerraCycle will handle delivery, returns and cleaning.

The products will cost roughly the same as the versions in single-use containers, but users will also have to pay a deposit of $1-$10 per container. Shipping charges start at roughly $20, decreasing with every item added.

 “Recycling is not the answer to garbage,” said TerraCycle CEO Tom Szaky. “The real problem is how do we solve waste, and the root cause of waste is disposability.”

Proponents of refillables say they can reduce greenhouse-gas emissions, waste and energy use. A bottle refilled five times as part of the project has an impact equivalent to five single-use bottles when accounting for the use of resources and the release of pollutants, estimates TerraCycle. Each use after that is incrementally better for the environment, the company believes.

The project isn’t likely to be profitable anytime soon given its small scale. Companies have had to invest between six and seven figures per product to subsidize prices and develop packaging, among other things.

“You simply have to start somewhere to test it and see what the barriers are and who actually buys into the model,” Unilever’s Research-and-Development Chief David Blanchard told the Journal, adding, “If there are sufficient people then you can scale it.”

Unilever participated in a 2010 pilot to sell laundry detergent in refillable containers, but that effort failed in part because consumers didn’t like the inconvenience of washing containers and returning to stores for refills, Blanchard said. The coming trial is more convenient because consumers don’t have to clean the containers or physically return them to stores.

Research contact: @SaabiraC