Head-to-Head Rivalry Over Hair-Care Market Heats Up -- WSJ
October 18 2019 - 3:02AM
Dow Jones News
By Saabira Chaudhuri
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 18, 2019).
LONDON -- The shampoo wars are back.
Unilever PLC -- the maker of Dove and TRESemmé -- is going head
to head with Pantene owner Procter & Gamble Co., cutting prices
in the U.S. as it aims to gain market share.
Hair has been a key battleground for consumer-products makers,
with shampoo offering healthy profit margins and opportunities to
innovate by adding minor ingredients. Women have also proved
willing to spend on hair brands that offer credible benefits.
"There's been a very vibrant and competitive battle in hair care
in North America," said Unilever Chief Financial Officer Graeme
Pitkethly. "I don't think it's going to be a quick win for us."
The tussle cut into Unilever's sales in the third quarter.
Underlying sales growth -- a closely watched figure that strips out
currency movements and deals -- was 2.9%. That's down from a rate
of 3.8% last year and below analysts' forecasts of 3% growth.
Unilever also blamed a tough comparison with a year ago when --
among other things -- hot weather in Europe buoyed ice cream sales,
for the slowdown. Total reported sales were EUR13.25 billion
($14.64 billion) for the quarter, up from EUR12.53 billion a year
earlier.
While Unilever, which also owns Hellmann's mayonnaise and Ben
& Jerry's ice cream, raised prices for its products in many
markets, Mr. Pitkethly said the rivalry with P&G had capped
increases in North America. Prices rose just 0.6% in the region,
compared with a 1.5% increase a year earlier.
P&G is "very focused on the fundamentals" in hair care after
"a very lackluster period," he said. "We give credit to P&G for
the quality of their execution and innovation in this space."
Both companies have lost share of the U.S. hair-care market in
recent years. Unilever's market share dropped to 17.1% last year
from 17.6% in 2017, while P&G fell to 13.9% from 14.6% over the
same period, according to Euromonitor. L'Oréal SA, the market
leader, has also lost share in the U.S. Big companies are
increasingly facing competition from niche, salon brands that reach
shoppers through Instagram and Facebook.
Shampoo is a particularly important market for Unilever, which
has shifted its focus toward personal-care products over the past
decade. Its new chief executive, Alan Jope, previously ran its
personal-care arm.
During that period, Unilever bought several personal-care
business, including VO5 and TRESemmé maker Alberto Culver Co. and
the TIGI professional hair-care business. Armed with its new range
of shampoos, Unilever went on the attack in the U.S., taking on
P&G on its home turf. Unilever's North American hair-care
business now comprises about 3% of global sales.
The rivalry between the two companies over hair goes way back.
In 2001, the companies struck a multimillion-dollar settlement
after P&G admitted spying on Unilever's hair-care division.
More recently, Unilever has doubled down on digital marketing to
win in hair. It launched a YouTube channel that offers styling
tutorials and has used social media to gather consumer insights to
inspire into new products. It has also launched bar shampoos under
its Love, Beauty and Planet brand, eliminating plastic
packaging.
P&G has also been on the offensive, rolling out its Herbal
Essences and Aussie hair brands globally. 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
Corrections & Amplifications Unilever's market share dropped
to 17.1% last year from 17.6% in 2017, according to Euromonitor. An
earlier version of this article incorrectly said its market share
fell compared with 2016. (Oct. 17, 2019)
(END) Dow Jones Newswires
October 18, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Unilever (NYSE:UL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Unilever (NYSE:UL)
Historical Stock Chart
From Sep 2023 to Sep 2024