P&G’s Results Show Coronavirus Has Given The Upper Hand Back to Traditional CPG Giants – Forbes

Written by Andria Cheng

Coronavirus has sent consumers panic buying and hoarding groceries and other household staples and made the world united in germaphobia. It looks like it may also be tilting the power pendulum back in favor of traditional CPG giants against upstarts.

In one telling sign, consumer products giant Procter & Gamble PG on Friday reported a better-than-expected 6% increase in organic sales, which exclude acquisitions and other items, in the fiscal third quarter that ended March 31.

Organic sales surged 10% in the U.S., its largest market. In contrast, the Commerce Department on Wednesday reported that March retail sales had plummeted 8.7% from February as increased online orders and a 27% surge in grocery store sales weren’t enough to offset plunges at non-essential retailers including clothing stores, department stores, and furniture and home furnishings outlets that have been ordered by many local governments to close.

P&G, which makes everything from Tide detergent and Dawn soap to Bounty paper towels and Swiffer wipes, saw its fabric and home care unit sales surge 10% while health care items rose 9%. Demand for Pampers diapers and other baby, feminine and family care items rose 7%.

“Consumers in the U.S. are doing more laundry loads per week and washing more garments after wearing them just once,” Jon Moeller, P&G’s chief operating officer and chief financial officer, said on a conference call Friday, adding that the company has seen “a spike in demand for Tide Antibacterial Spray.” “More loads are being done with unit-dose detergents.”

The frequency of doing dishes has also increased as families eat more meals at home and are more concerned about the hygiene of their dishes, glasses and silverware, Moeller said, adding that consumers now favor “a disposable cleaning solution.” That pattern has contributed to the increased use of Bounty, Swiffer and Mr. Clean products.

P&G, which also makes Vicks vaporizers, has picked up market share on many in-demand items, including respiratory products, Olay moisturizers, Oral-B electric toothbrushes, Dawn and Cascade dish detergent, Crest toothpaste, and Gillette blades and razors, Moeller said.

“Consumption of our products is not likely to dissipate,” he said. “We will serve what will likely become a forever-altered health, hygiene, cleaning focus. … There is potential for increased preference for established, reputable, dependable brands that solve newly framed problems better than other alternatives, potentially less experimentation.”

He may be right. Surveys have shown consumers have begun to significantly cut back on discretionary spending, with 22 million Americans having filed for unemployment benefits in the past four weeks.

Hunkering down at home and stocking up on pantry items have sent consumers back to shopping in the center aisle of supermarkets, buying items from Campbell soup to canned beans. In my store visits, I repeatedly observed an interesting contrast: empty shelves of soaps, sanitizing wipes and other products with antibacterial claims next to still-well-stocked counterparts with natural ingredients that were not long ago seen as more desirable.

Why? Consumers want brands they know will offer “the experience” they seek because they don’t want to risk wasting money, Modi said. Another key reason? Bigger brands have “supply chains that enable better availability,” he said.

That, at a time when toilet paper, sanitizing wipes and other household items can still be hard to find, may keep shoppers going back to the giants.

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By Valerie Barrios
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