Sales rise for P&G, Colgate, Unilever; luring consumers with new products, promotions

Shoppers hand product makers rising sales

CINCINNATI — Big-brand consumer products companies are starting to win the battle for shoppers who traded down to store brands by cutting prices, rolling out both lower- and higher-priced new products, and pumping up promotions.

Procter & Gamble Co., Colgate-Palmolive Co. and Unilever NV all showed strong sales growth in Thursday’s quarterly earnings report, although P&G’s results were hurt by charges including from the U.S. health care overhaul and Colgate took a hit from the currency devaluation in Venezuela.

While consumers are still minding their budgets, the rising sales are an encouraging, if tentative, sign of economic rebound after more than a year of steep shopper cutbacks.

“These are companies that sell everyday household products,” said Jack Russo of Edward Jones, who covers P&G and Colgate. “Procter has been introducing products that have more of a value equation. I wouldn’t say that consumers are jumping back in on the premium products.”

The three companies’ sales surged overall, particularly in emerging markets and after price cuts meant to lure consumers back from cheaper private label and store brands.

“We are doing what we have to do price-wise to stay price-competitive,” Bob McDonald, P&G chairman and CEO, told investors on a conference call.

Colgate shares fell 20 cents to $84.80 Thursday, while P&G was off 97 cents, or 1.5 percent, at $62.20.

P&G is trying to combine brand strength with lower-priced alternatives while also grabbing shoppers’ attention with upgraded products and stepped-up marketing. The maker of Tide detergent and Pampers diapers says revennue rose 7 percent, to $19.2 billion, while profit dipped 1 percent to $2.59 billion, or 83 cents per share, with a 5-cents-a-share charge for costs from health care changes in its third fiscal quarter.

Colgate-Palmolive, maker of Colgate toothpaste, Palmolive dishwashing liquid and Ajax cleanser, saw revenue rise more than 9 percent, to $3.83 billion. But first-quarter earnings fell 30 percent, to $357 million, or 69 cents per share, after the company took a charge for the currency changes in Venezuela, a key South American market.

Unilever NV, the maker of Lipton tea, Dove soap and Ben & Jerry’s ice cream, reported a 33 percent jump in first-quarter profit and a revenue increase of 6.7 percent.

“In cutting prices, Unilever continues to up the pressure on rivals” analyst Keith Bowman of Hargreaves Lansdown said in an earnings note. He described the company’s strategy as “intense advertising combined with successful product innovation and stringent cost control.” The companies increased marketing to remind shoppers of their famed brand names and introduce new products as some households started to loosen up recession-squeezed pocketbooks.

P&G said U.S. sales were strong for the “basic” versions of Charmin toilet paper and Bounty paper towels and in western Europe for a lower-tier Pampers called Simply Dry.

Both Unilever and P&G had to cut some prices in the quarter because people are more apt to trade down to off-brand household products, said David Kolpak, managing director at Victory Capital Management in Cleveland.

“Consumers are just flat-out a lot more loyal to branded products when it comes to stuff you use for your appearance and your health than when it comes to mopping your floor or cleaning your countertops,” he said.

McDonald said P&G’s new-product lines have come up with not only a a low-priced version of Tide in India but the Gillette ProGlide shaver, hitting U.S. store shelves in June, that will cost about 10 percent more than the top-selling Gillette Fusion.

“So we are just doing what we have to do to continue to win the consumer value equation, and we are attempting to do that through the strongest innovation program that we’ve had in my 30-year career,” McDonald said.

AP Retail Writer Emily Fredrix in New York and Business Writer Toby Sterling in Amsterdam contributed.