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For P&G, emerging markets return to centre stage

May 21, 2013 10:23 IST

RetailFor Procter & Gamble, the world’s largest consumer products company, the focus seems to be back on emerging markets.

This follows a brief period that saw the maker of billion-dollar brands such as Pantene, Whisper, Crest and Olay concentrate on growth in markets such as the US, China and western Europe.

At seven per cent, P&G’s growth in net profit for 2012-13 was better than expected, while sales growth continued to be sluggish at two per cent.

Analysts say the company has been left with no choice, but to turn its attention back to developing countries.

While developing markets account for 55-57 per cent of the revenues of Anglo-Dutch major Unilever, P&G gets about 40 per cent of its annual turnover from these countries.

In a recent investor meet in the US, P&G’s global chief financial officer, Jon Moeller, said, “We are committed to maintaining developing-market momentum, strengthening our core business in developed markets, having a robust innovation pipeline and looking at cost improvements.

"We will look at expanding into new spaces and stepping up investment behind our brands.”

P&G has already set the ball rolling on the second leg of its turnaround plan, expanding its laundry line under Ariel in South Africa earlier this month.

It is also expanding the footprints of products such as Tide Pods detergent into markets such as Mexico and Brazil, besides aggressively pushing Gillette sensitive skin razors and its Pantene Expert hair care range in developing countries.

In India, the launch of the company’s Oral-B toothpaste would be P&G’s biggest in a year. Last year, it had launched Olay Face Wash and re-launched air freshner Ambipur, which it had acquired from Godrej Consumer, after a global buy-out of the brand from Sara Lee.

Godrej Consumer Products had a joint venture agreement with Sara Lee, whose stake it bought in 2010. Subsequently, P&G acquired the Ambipur brand from Godrej Consumer Products for Rs 40 crore (Rs 400 million).

Oral care is one of P&G’s key categories, besides beauty and laundry. Oral-B is the worldwide leader in the toothbrush segment, while Crest is one of the largest toothpaste brands in the world, competing with Colgate.

In recent years, P&G has extended the Oral-B brand to toothpastes as well, launching it in markets such as Greece, Portugal, Israel and Venezuela.

A recent report from brokerage house Edelweiss had said the company planned to launch Oral-B toothpastes in many more countries.

The impending launch in India would be a step in that direction, it had added.

Viveat Susan Pinto in Mumbai
Source: