P&G aims to continue its market expansion, despite rising costs

By Simon Pitman

- Last updated on GMT

Related tags Organic sales growth Marketing Jon moeller

Procter & Gamble CFO Jon Moeller says the company still aims to increase its market share significantly in the course of the year, despite the spectra of rising costs.

Speaking at the Consumer Analyst Conference in New York last night, Moeller said that the company is sticking to forecasts for the next two quarters and remains undaunted in its longer-term growth expectations.

While stating that rising raw material prices and political unrest in the Middle East are likely to impact the business in the current quarter, retail price increases are expected to counterbalance this effect, enabling the company to continue growing.

However, during the conference Moeller did also concede that given the tough market conditions, the company might find it difficult to hit the top end of its expectations for 2011.

Organic sales growth of 3 - 5 percent in 2011

The company said it was sticking by estimates that organic sales growth, which excludes influences such as divestitures, acquisitions and currency fluctuation would continue to grow at 3– 5 percent in 2011.

In line with big ambitions that are shared by major competitors such as Unilever and L’Oreal, the company is eyeing major international expansion in the coming years, with developing markets expected to be the main geographical focus for the growth.

The company believes that continued investment in innovation, derived from it $2bn annual spend on research and development, is likely to maintain its competitive edge in the fast-changing international cosmetics and personal care market place.

Increasing share of retail channels and category price tiers

Focusing on its strategy to increase its market share worldwide in the course of the next five years, Moeller stated that P&G’s ambition is to enter 750 new category price tiers worldwide.

This strategy aims to increase the company’s share of viable retail channels in the top 50 countries worldwide from a current figure of approximately 40 percent to an estimated 55 – 56 percent by 2016.

The company is aiming to increase its footprint by targeting growth in all the retails categories it is present in, which will see it concentrating efforts to expand in the mass, premium and super premium categories.

2011 organic sales growth expected to be 3 - 5 percent

At the end of January P&G announced steady gains for its third quarter sales ending in December, but revealed that profits were down on lower retail pricing and negative currency exchange rates.

The company said that net sales increased 2 percent to $21.3bn during the quarter, driven by a six percent increase in volumes, which was partially offset by the negative impact of currency exchange rates. Organic sales grew by 3 percent.

Looking ahead to the full year 2011, the company expects sales to grow by 3 to 5 percent, while organic sales should see increases of between 4 to 6 percent. Negative currency translations are forecast to impact sales by 1 to 2 percent.

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