Unilever Cuts Prices as Shampoo Rivalry Grows -- Update

Date : 10/17/2019 @ 9:17AM
Source : Dow Jones News
Stock : Unilever PLC (UL)
Quote : 59.03  -0.27 (-0.46%) @ 12:59AM
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Unilever Cuts Prices as Shampoo Rivalry Grows -- Update

Unilever (NYSE:UL)
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By Saabira Chaudhuri 

LONDON -- Unilever PLC said it was forced to lower prices in the U.S. to compete in the shampoo market with its rival Procter & Gamble Co., as the owner of Dove and TRESemmé reported slower third-quarter revenue growth compared with a year earlier.

"There's been a very vibrant and competitive battle in hair care in North America," said chief financial officer Graeme Pitkethly.

Unilever reported sales of EUR13.25 billion ($14.64 billion) for the quarter, up from EUR12.53 billion a year earlier. Underlying sales growth -- a closely watched figure that strips out currency movements and deals -- was 2.9%. That is a deterioration from a year ago when Unilever reported growth of 3.8%, and slightly below analyst estimates for growth of 3%.

Mr. Pitkethly said Unilever is still on track to hit annual growth targets and results were held back by a tough comparison with a year ago, which included an exceptionally hot summer in Europe that had boosted sales of its ice cream products.

Overall, results were driven by both volume and price, with emerging markets growth driving sales.

In North America, however, Unilever raised prices by just 0.6% compared with a 1.5% increase a year earlier. Mr. Pitkethly blamed the rivalry with P&G for capping price growth, saying the U.S. company was "very focused on the fundamentals" in hair care after "a very lackluster period."

P&G said its hair brands have been expanding globally and the company is focused on improving products, packaging, communication and distribution.

Hair care has been a key battleground for consumer-goods companies in developed markets like the U.S. and Western Europe for years, and recently in China as well. Shampoo provides big profit margins and the potential for innovation through adding minor ingredients like vanilla extract or keratin proteins.

For Unilever, success in shampoo against its rival is particularly important. Over the past decade, it has shifted its focus toward personal-care products. Its new chief executive Alan Jope was previously head of its personal-care arm.

Unilever bought Alberto Culver Co., maker of Alberto VO5 and TRESemmé hair-care products, for $3.7 billion in 2011 and the TIGI professional hair-care business for EUR411.5 million in 2009. Since then, armed with this new range of shampoos, Unilever has gone on the attack in the U.S. Its North American hair-care business now comprises about 3% of global sales.

The company has doubled down on digital marketing over the past few years, with a YouTube channel that offers styling tutorials. It has also used social media channels to gather consumer insights that can be translated into new products and launched bar shampoos under its Love, Beauty and Planet brand, eliminating plastic packaging.

P&G has been rolling out its Herbal Essences and Aussie hair brands globally and the company has said it is focused on improving products, packaging, communication and distribution. It has launched a new rose water sulfate-free shampoo under its Pantene brand and tweaked the formula and packaging for Head & Shoulders.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com


(END) Dow Jones Newswires

October 17, 2019 05:02 ET (09:02 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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