Beating the Odds: Three CG Companies Thrive Despite a Recession
In a recent Brandweek article, titled "Why Some Brands Cheer a Sour Economy", Marc Babej, partner at the strategy firm Reason, comments on the recession: "If you're a brand you eat, drink, smoke or wash yourself with, you're going to be OK."
The aforementioned quote can arguably sum up the status of many consumer goods companies in the current economy. Although some companies are going through job cuts, facility closures and divestitures to stay afloat, others are still thriving at a steady pace. What seems to be the common ground of these few victors? They all manufacture the necessities, just as Babej said in the Brandweek article. The following three companies have excelled in the face of a recession, even in the pitfalls of their peers.
1. The Clorox Company: In October this year, The Clorox Company issued a press release that announced strong growth with its first-quarter sales growth of 12 percent to $1.38 billion compared with $1.24 billion in the year-ago quarter. The release also summarizes some of its key growth factors, including primary growth driven by Burt's Bees products (acquired October 2007); Green Works natural cleaners; all-time record shipments of Glad ForceFlex trash bags, Brita water-filtration products, Fresh Step scoopable cat litter and Kingsford charcoal products. Also contributing to volume growth in the segment were higher shipments of Clorox 2 stain fighter and color booster, which was relaunched with a concentrated formula. Volume growth was also driven by shipments of laundry and homecare products in Latin America. Sales growth outpaced volume growth primarily due to the benefit of price increases and favorable foreign exchange rates.
2. The Wm. Wrigley Jr. Company: Before becoming a subsidiary ofprivately held Mars, Incorporated in October 2008, Wrigley announced a 14 percent gain in second quarter 2008 sales to a record $1.57 billion. This was the company's highest sales quarter ever, according to a July 2008 financial press release. Bill Wrigley, executive chairman and chairman of the Board, said at the time, "Despite increased competition and relatively tougher economic conditions, we continue to produce strong near-term results, which is testimony to the strength of both our team and our brands. More importantly, we are doing so while continuing to lay the groundwork for the long-term, generational growth of our business, with significant innovation and marketing investments in key geographies around the world."
3. The Procter & Gamble Company: The Procter & Gamble Company (P&G) announced net sales growth of 9 percent for the July-September quarter to $22 billion in a press release issued in October 2008. Sales growth was led by strong growth in the Beauty, Fabric Care & Home Care and Baby Care & Family Care segments. P&G's Chairman of the Board and CEO A.G. Lafley commented, "We continue focusing on leading innovation and improving productivity to deliver superior consumer and shareholder value. This focus on delighting consumers with trusted household and personal care products that consumers purchase weekly and use daily gives me continuing confidence P&G will deliver target growth over the long term, even in a challenging economic environment."
Some key similarities emerge when examining the success of these companies other than the fact that they provide consumers with necessities. Focus on core brands; A.G. Lafley says that this focus on delighting consumers with trusted household and personal care products (or any key brands) brings confidence to P&G's target growth statistics. Think green; Clorox remains confident about its key green products like its Green Works natural cleaners and relaunched concentrated laundry detergents. Focus on international markets; Clorox did well with sales to Latin America and Wrigley concentrated on key markets, like Russia and China. And, of course, innovate; almost every company on this list strives to make the right investments in innovation, followed by innovation in marketing tactics.
The aforementioned quote can arguably sum up the status of many consumer goods companies in the current economy. Although some companies are going through job cuts, facility closures and divestitures to stay afloat, others are still thriving at a steady pace. What seems to be the common ground of these few victors? They all manufacture the necessities, just as Babej said in the Brandweek article. The following three companies have excelled in the face of a recession, even in the pitfalls of their peers.
1. The Clorox Company: In October this year, The Clorox Company issued a press release that announced strong growth with its first-quarter sales growth of 12 percent to $1.38 billion compared with $1.24 billion in the year-ago quarter. The release also summarizes some of its key growth factors, including primary growth driven by Burt's Bees products (acquired October 2007); Green Works natural cleaners; all-time record shipments of Glad ForceFlex trash bags, Brita water-filtration products, Fresh Step scoopable cat litter and Kingsford charcoal products. Also contributing to volume growth in the segment were higher shipments of Clorox 2 stain fighter and color booster, which was relaunched with a concentrated formula. Volume growth was also driven by shipments of laundry and homecare products in Latin America. Sales growth outpaced volume growth primarily due to the benefit of price increases and favorable foreign exchange rates.
2. The Wm. Wrigley Jr. Company: Before becoming a subsidiary ofprivately held Mars, Incorporated in October 2008, Wrigley announced a 14 percent gain in second quarter 2008 sales to a record $1.57 billion. This was the company's highest sales quarter ever, according to a July 2008 financial press release. Bill Wrigley, executive chairman and chairman of the Board, said at the time, "Despite increased competition and relatively tougher economic conditions, we continue to produce strong near-term results, which is testimony to the strength of both our team and our brands. More importantly, we are doing so while continuing to lay the groundwork for the long-term, generational growth of our business, with significant innovation and marketing investments in key geographies around the world."
3. The Procter & Gamble Company: The Procter & Gamble Company (P&G) announced net sales growth of 9 percent for the July-September quarter to $22 billion in a press release issued in October 2008. Sales growth was led by strong growth in the Beauty, Fabric Care & Home Care and Baby Care & Family Care segments. P&G's Chairman of the Board and CEO A.G. Lafley commented, "We continue focusing on leading innovation and improving productivity to deliver superior consumer and shareholder value. This focus on delighting consumers with trusted household and personal care products that consumers purchase weekly and use daily gives me continuing confidence P&G will deliver target growth over the long term, even in a challenging economic environment."
Some key similarities emerge when examining the success of these companies other than the fact that they provide consumers with necessities. Focus on core brands; A.G. Lafley says that this focus on delighting consumers with trusted household and personal care products (or any key brands) brings confidence to P&G's target growth statistics. Think green; Clorox remains confident about its key green products like its Green Works natural cleaners and relaunched concentrated laundry detergents. Focus on international markets; Clorox did well with sales to Latin America and Wrigley concentrated on key markets, like Russia and China. And, of course, innovate; almost every company on this list strives to make the right investments in innovation, followed by innovation in marketing tactics.