P&G: Consumers drive consumption

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With the delta variant slowing the return of workers to the office, consumer goods giant Procter & Gamble Co. said demand for many of its products remained heightened and continued to drive e-commerce growth for the company.

CFO Andre Schulten said P&G continues to see high demand for paper towels, 10%, and toilet tissue, 5%, as consumers continue to spend more time at home than before.

“I think the strength of consumption in all categories is really determined by the choice of categories in which we operate,” Schulten told investors and analysts on a conference call, highlighting the focus of the company on health, hygiene and clean homes – categories that have received increased attention since the start of the global pandemic.

Digital sales of P&G products grew 16% year-on-year between July and September, the chief financial officer said, and 66% from 2019. In the United States in particular, e-commerce grew 11% per year. compared to 2020.

Digital currently accounts for around 14% of P & G’s total sales, including both direct to consumer (D2C) and through omnichannel partners such as Walmart and Target.

“We believe that focusing on strong brands, such as driven by COVID, specifically benefits us in an eComm environment where we appear in search on the front page,” Schulten said.

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Price increases

P&G has announced that it will increase the prices of certain toiletries, skin care and oral care products, following price hikes earlier this year on such commodities as diapers, paper. toiletries and feminine hygiene products. Schulten said the degree and timing of price increases are “very specific to the category, the brand and sometimes the form of product within a brand.”

“It’s not a one-size-fits-all approach,” he said.

Related: P&G warns of $ 1.9 billion cost increase for fiscal 2022

Schulten noted that P&G will closely monitor consumer demand as price increases hit store shelves, but said the company has yet to see noticeable changes in consumer behavior. Prices are expected to be a major contributor to sales growth in the coming quarters.

P&G recorded $ 20.3 billion in the first quarter of its fiscal 2022, which began in July, a 5% increase year-over-year. Excluding currency effects, acquisitions and disposals, organic sales increased by 4%, driven by an increase in volumes of 2%, a price increase of 1% and a positive mix effect of 1%.

Navigate supply chain issues

The price increases are in part a response to pressure on supply chains around the world, forcing dozens of ships to stay offshore waiting to be unloaded due to a shortage of capacity and workers in ports, warehouses and transit companies.

Schulten said P&G is certainly not immune to the impacts of tangled supply chains, but its scale and relationships with suppliers around the world allow for more flexibility, allowing sourcing to shift from one supplier. to another if materials are not available or freight lanes are not open enough.

P&G is also able to store inventory “on a global basis,” the CFO said, which means the company does not have to stockpile in the same location where the product will ultimately be sold to a consumer.

“Of course, if there were major disruptions in supply chains, we would be exposed like everyone else,” Schulten told analysts, but noted that P&G has been investing to strengthen its supply chain for several years. .

“We still have significant opportunities in our supply chain to take advantage of the digitization we have invested in our supply chain in recent years, better synchronize demand from suppliers to retail partners. he said, adding that P&G still has more work to do to optimize work processes and use automation.

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