… as pricing policy hits own-label

Procter & Gamble’s Every Day Low Pricing strategy on selected brands appears to be succeeding in halting the progress of own-label rivals.

According to figures from IRI Infoscan, P&G’s EDLP move on Fairy washing-up liquid in February, has reversed own-label sales growth.

In February, P&G slashed the price of Fairy from 79p to 72p. At the same time, Lever Brothers reduced the price of its rival washing-up liquid Persil by 10p, to 69p.

In retaliation, own-label rivals Sainsbury’s and Tesco cut the price of their products from 69p to 65p (MW March 1).

IRI Infoscan shows a fall in the value of total own-label sales from 24.6 per cent to 23.9 per cent between January and May. Market leader Fairy appears to have halted its sharp fall in sales as a result of the strategy. In January it accounted for 48 per cent of the market. In February, the month the price cut occurred, sales fell to 45.9 per cent. But by May they increased to 47.6 per cent.

Lever’s Persil also increased sales: from 10.7 per cent to 14 per cent between January and May. According to sources close to Unilever, this has largely been due to sustained advertising support.

P&G’s Lenor and Pampers were also involved in the EDLP strategy. P&G claimed at the time that it did not plan to cut advertising support to fund the price cuts, but cut back on sales promotions (MW February 23).

P&G appears to have retreated from its original decision to cut back its media spend, concentrating instead on cutting promotional spend and production costs (MW June 21).

Media, page 12