P&G and Unilever: set to do battle?

Related tags Unilever Marketing

Despite announcing rising profits yesterday, both Unilever and
Proctor & Gamble saw their stock prices slip, reflecting
growing concerns over excessive competition in the FMCG sector.
Simon Pitman reports.

Both of the companies are major global players in the cosmetics and toiletries markets but in recent months growing competition between the companies' major brands had led to added concerns over their future performances. Analysts say that market saturation suggests the potential for future growth is likely to diminish in the future and that the next 12 months will be vital to the long-term livelihood of both companies.

P&G​ reported that its profits had grown by 14 per cent for its first quarter, while Unilever​ said that profits had risen by 6 per cent for its third quarter. Having once again been put in the shade by its arch-rival, Unilever blamed its comparatively lack luster performance on poor weather in Europe, which had affected sales of its ice cream and tea brands.

Unilever's sales fell by 4 per cent for the quarter, to €10.6 billion, while Unilever's sales increased by 13 per cent to $13.7 billion (€10.7bn).

"We are dissatisfied with our performance and actions are being taken to improve the market competitiveness of our products,"​ said Unilever executives Antony Burgmans and Patrick Cescau in a joint statement.

In response Unilever has said that it will continue to discount its products as well as investing more in advertising and marketing its core brands - a tactic that is likely to put further pressure on P&G's future results and somethign that has in turn caused jitters amongst investors.

Looking specifically at the cosmetics segment, P&G has cut prices for hair care products in Asia, which Unilever has responded to with aggressive marketing tactics offering similar discounts in that market.

If further discounting does prove to be the way forward for both companies industry observers suggest that future financial results will be hit by such moves, with profits likely to be hard hit.

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