Friday, August 17, 2012

Marketing Spend Pays Off for CPG Giants

Español: Pasta y jabon

According to an article on, Unilever, L'Oreal, Colgate-Palmolive and Kimberly-Clark Corp. all beat analyst expectations for sales growth last quarter as they met or beat earnings forecasts and hiked marketing spending despite a slowing global economy.

Three of the four said they stepped up marketing spending last quarter or in the first half as they recently announced quarterly results, while L'Oreal has previously indicated plans to hike spending about in line with sales.

Their results stood in sharp contrast to the picture painted by industry heavyweight Procter & Gamble (P&G) when it last month pulled down organic sales and earnings forecasts for the quarter due to market share, economic and currency woes.

UBS Investment Bank Managing Director, Nik Modi, comments, "We believe Colgate's impressive results this quarter (along with Kimberly-Clark, Unilever, Natura, L'Oreal) confirms our thesis that P&G's competition is likely to benefit from internal distraction/disruption at P&G due to its current restructuring initiatives.

According to the article, Kimberly-Clark executives said on an earnings conference call that "strategic marketing spending," which excludes price promotion, was up 25 percent or around $100 million, bringing it to near the 5 percent of sales where that measure stood in 2010 before K-C pulled back on spending amid rising commodity costs last year.

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