Procter & Gamble competes with
in the consumer products businesses, and companies like
in the personal care and beauty segments.
Continuing high levels of unemployment and a difficult economic environment have weighed on the company's earnings in the U.S., which is its largest market. Declines in disposable income levels have led consumers to shift their purchases to lower-priced products in categories such as detergents and oral care, according to the company.
The two biggest products segments within Procter & Gamble, Detergents & Household Cleaning Products, and Gillette (Grooming segment),
of Procter & Gamble.
Market Share Gains On the Way
With decline in disposable income levels, consumers in general have traded to lower-priced products. This is highlighted by a 4% organic growth (excluding the impact of foreign exchange and acquisitions/divestitures) in net sales, which is well behind the 8% growth in volumes. However, the market share data reveal a more robust strategy in play and a promising outlook for Procter & Gamble. As per the latest quarterly reports, Procter & Gamble's market share increased in 13 of the top 17 countries.
Growth in Emerging Markets
While Procter & Gamble continues to expand its consumer base to realize it goal of reaching an additional one billion consumers by 2014-2015 by expanding into emerging markets of India, China and Brazil, it in no way has lost focus of its core U.S. market.
The U.S. share of total business within Procter & Gamble's portfolio declined from 41% in 2009 to 38% in 2010, but this was primarily on account of double-digit growth in emerging markets. It has been expanding its market share in the developed markets, which currently have lower value growth but present an equally promising upside with recovery in macroeconomic conditions. Offering lower-priced products to consumers has maintained a robust growth in volumes, thereby gaining market share during the recessionary times.
We estimate that despite a continuing difficult macroeconomic outlook in the U.S., a rise in market share in the two largest products segments -- Detergents & Household Cleaning Products and Gillette (Grooming segment) -- in the developed markets alone could lead to upside to our current Trefis price estimate.
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