Proctor & Gamble
) leads the global laundry detergent market with a share of around
30% as of 2009. The market share has kept increasing consistently
over the years led by acquisitions, aggressive marketing and
Under its fabric care business, P&G sells laundry detergent
products like Tide, Gain and Ariel - each brand contributing above
$1 billion in annual sales - as well as fabric softeners like
Bounce and Downy, and bleach products. It competes with Unilever (
), Clorox (
), and Colgate-Palmolive (
) in the fabric care market.
As consumer demand in developed markets like US and Europe is
getting saturated, developing markets like Asia and Latin America
will be key for P&G's future growth prospects.
While we expect P&G's share in the laundry market globally
will hover around 32% in the coming years, Trefis members are
confident that the share will reach 35% by 2016. We currently have
Trefis price estimate of $83.81 for Procter &
, about 31% above the current market price of $64.05.
Shifting Demand from Developed to Developing
Developed markets like the US, Western Europe and Japan, where
P&G leads the laundry market, are witnessing saturated consumer
demand and have relatively lower population growth rates, which
means there is limited growth potential. In comparison, developing
countries like India and China with their huge population size and
rising middle class incomes are the key growth markets for P&G
and other producers of home care products.
According to Euromonitor International, laundry care products
accounted for 53% of the overall home care industry sales in 2009,
with Asia and Latin America being the key drivers. The report also
noted value declines from Spain, France, Germany and the US
markets.. P&G lowered its prices of diapers, shampoo and
laundry products in India to gain share from market leader Unilever
in 2009. Lowering of prices has increased P&G's share in India
to 6% in 2009 from 3.7% in 2004.
Aggressive Marketing and Product Innovation are P&G's
The main reason for P&G's market leadership in laundry
products is its keen understanding of consumer needs and cultural
orientations. P&G has created products such as Downy Single
Rinse, a low-water volume detergent, for developing countries where
consumers are conscious about water consumption.
The company recently started its Future Friendly campaign in the
US to raise awareness about greener products and greener practices.
As part of the campaign, P&G has set a target of selling $50
billion "sustainability driven" products by 2012.
The Trefis community predicts that P&G's global market share
for laundry products will increase from 34% in 2010 to 35% by 2016,
compared to the baseline Trefis estimate of around 32% during the
same period, implying a small upside of 1% to the Trefis price
estimate for P&G's stock.
complete analysis for Procter & Gamble's stock is