Procter & Gamble’s quarterly earnings, announced Wednesday, showed what many already knew: the pandemic has been profitable for companies with strong brands focused on home cleaning products and other core necessities, as consumers spend more time at home.
And in a conference call with financial analysts Jon Moeller, P&G’s chief financial officer, said the company believes much of the consumer behavior that began during the pandemic is here to stay.
“We will serve what will likely become a forever altered cleaning, health and hygiene focus for consumers,” he said.
“While the first rounds of vaccines have been deployed, the number of COVID cases remain high in many parts of the world, without the resources or infrastructure to effectively manage it," Moeller continued. "Despite the launch of vaccines, we'll likely be operating through fiscal '21 much as we have been for the past nine months.”
Procter & Gamble’s new fiscal year begins in June, so Moeller is suggesting that the pandemic will affect consumers worldwide at least through this calendar year.
The CPG giant said its second quarter revenue rose 8%, to $19.75 billion, and it expects 5%-6% revenue growth at the end of its fiscal year, in June, up from an earlier estimate of 4%-5%
P&G expects its earnings to grow 8%-10%, up from an earlier estimate of 5% to 8%.
Consumers flocked to P&G products like Bounty paper towels and especially Charmin toilet tissue, but other items as well.
For example, P&G explained, the company’s grooming division sales rose 6% over a year ago, helped by a 20% increase in sales of at-home shaving and styling products.
Indeed, Moeller reported, in bullet-point fashion, “Each of our 10 product categories grew organic sales. Home Care up around 30%, Oral Care and Family Care up double digits, Fabric Care, up high singles. Personal Health Care, Feminine Care, Hair Care, Skin and Personal Care and Grooming up mid singles and Baby Care up low single digits. E-commerce sales up nearly 50% for the first half. Aggregate market share growth of 20 basis points this quarter."
Moeller said the changes in consumer behavior included increased consumption of P&G products. In the U.S., cleaning and sanitizing frequency is up 30%, dishwashing frequency is up 15%, air freshening frequency is up 20% and in-home paper towel usage, up 15%. With trusted brands in those categories, P&G has a marketing advantage.
Some new products, like the new Microban 24 sanitizer, are feeling the effect of a marketing effort by P&G to explain how things work.
“We're modifying packaging, so that it's clearer relative to the health hygiene, clean home benefits that our products offer. We're educating, both to your point on usage occasions and helpful tips around the home.” Moeller said in the home care category, P&G “has shifted a fair amount of advertising to an educational format, which is designed again to serve consumers during this difficult period.”
The company is taking this educational aspect seriously. At the recent CES virtual tech show, Marc Pritchard, P&G’s chief brand officer, showed off its immersive P&G LifeLab, a virtual online presentation (shown above) which was designed for the convention to highlight the company’s product innovations and sustainability efforts. But P&G will keep LifeLab around online, offering it to retailers and to consumers. “This is our first leap into virtually engaging people,” Pritchard told Marketing Daily.