Positive Outlook for P&G's Share of Grooming Market


Proctor & Gamble ( PG ) competes with Unilever Group ( UL ), Revlon ( UL ) and L'Oreal ( LRLCY ) in the male grooming market. Its share in the global grooming market has risen steadily since its acquisition of Gillette in 2005 for a whopping $57 billion in 2005. We expect this positive trend to continue, driven by growth in emerging markets like India and China, expansion of product lines, and acquisition of newer brands.

While we anticipate P&G's global grooming market share will increase to 52% by the end of our forecast period, Trefis members predict the share will reach close to 60%, representing a small upside to our price estimate for P&G stock.

We currently have a $75.25 price estimate for Procter & Gamble's stock , roughly 20% ahead of the current market price.

Growing Demand from Emerging Markets

P&G's Gillette brand has a 71% share of the fast growing global manual razor and blades market. P&G's products are sold in over 180 countries giving it a strong and established distribution network through mass merchandisers, grocery stores, and drug stores.

Emerging markets like China, India and Brazil are seeing rising consumer income levels. P&G is investing heavily in these markets with customized products at competitive prices. Over the last two years, P&G has gradually cut the price of its most popular Mach III Razor in India from close to $6 to less than $2, in anticipation that replacement blade volumes, with significantly higher margins, will drive revenue growth (See P&G Targeting Gillette Market Share in India).

With an ambitious plan of acquiring one billion additional consumers by 2014-15 by targeting China and India, we expect P&G to greatly benefit from the emerging markets growth story (See P&G's Growth Hinges on Good Execution in China and India).

Expansion in Premium Products

Gillette has been adding new products such as advanced razors and blades under the Gillette Fusion Pro-Glide and Gillette ProSeries, launched in 2010, to expand into the premium segment. Increasing volumes in premium product segments should increase Gillette's value sales and raise its market share. In addition to Gillete, P&G's other known brands include Braun (which markets electric shavers, power toothbrushes, epilators, and hair styling electrical devices), and skin care products like Old Spice.

In mid-2009, P&G acquired two brands, Art of Shaving and Zirh. Art of Shaving is a premium brand which sells razors, shaving creams and other products to upscale clients. Zirh is again a high-end natural line of men's grooming and skin care products. These two brands will further increase P&G's presence in men's toiletries and the skin care market.

See our full analysis and $75.25 price estimate for Procter & Gamble's stock

Trefis Community Forecast

Trefis members forecast that P&G's share of the grooming market will increase from 51% in 2010 to 59% by the end of our forecast period, compared to the baseline Trefis estimate of an increase to 52% during the same period. The member estimates imply a small 3% upside to our $75.25 price estimate for Procter & Gamble's stock .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: LRLCY , PG , UL



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