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Procter & Gamble battles low growth with innovation

  • News
  • April 12, 2017
  • Sarah Dunn
Procter & Gamble battles low growth with innovation

Falling sales in New Zealand have led US consumer-goods giant Procter & Gamble to overhaul its approach to the Kiwi market. Managing director of P&G New Zealand and Australia, Antoine Brun, shared how the company plans to lure customers back by boosting retail innovation.

Procter & Gamble has been underinvesting in its Kiwi business and isn’t performing well in New Zealand right now, admits Brun.

“We observe that overall - consumption in the categories where we operate in New Zealand is essentially flat and even declining in some categories – so we feel we have a role to play in partnering with retailers to achieve total category growth.”

Among the company’s brands are Gillette, Vicks, Metamucil, Pantene, Herbal Essences, Olay, Head & Shoulders, Venus, Clearblue, Braun and Ambi Pur. Nearly half of the business is based in North America, with its Asia Pacific operations making up just 9 percent of the company. Procter & Gamble reported net sales of $65.3 billion in 2016.

Brun says Procter & Gamble has identified a key weakness in its fast-changing executives on the ground in New Zealand. Formerly, he says, the company would send executives to New Zealand for jobs, and they’d typically stay for two to three years before departing. When these executives left, they’d take their understanding of the Kiwi market with them, meaning Procter & Gamble struggled to truly understand New Zealand consumers.

A new partnership with distributor Diplomat NZ will address this shortfall by giving Procter & Gamble a permanent presence on the ground, Brun says.

“We have invested significantly in appointing a distributor partner – Diplomat NZ - to give our NZ business independent focus – with its own integrated local operations in market.”

“We need to shift our mindset from treating the shopper as a ‘family manager’ only, who is simply buying commodities and driven heavily by price and promotion – to treating the shopper as a woman or a man, understanding their distinct needs and offering them the most compelling in-store experience every day.

Brun believes that the biggest key to winning back Kiwi consumers will be innovation.

“Innovation is first and foremost what can accelerate market growth” says Brun. “Innovation starts with superior products that improve consumers’ lives, but it goes beyond, for example with the way we present the products in store.”

As an example of the kind of innovation Procter & Gamble is now prioritising, Brun mentions a new range of toothpaste, Oral-B Pro-Health Advanced. This premium toothpaste was presented to the New Zealand market on the back of research indicating New Zealanders’ level of dental health was close to the worst in the world.

“I was very surprised,” Brun says.

He says Procter & Gamble felt it was relevant to bring products to market to help Kiwis take care of their teeth.

The company is also working closely with Green Cross, a significant player in New Zealand’s pharmacy sector. Pharmacy is a significant channel for Procter & Gamble, which wants to work with Green Cross to develop healthcare solutions for pharmacies – for example, oral hygiene education.

Brun says Procter & Gamble is genuinely committed to getting to know Kiwi consumers. It wants to grow the total segment. Retail sales are now up for the first time in five years, and the company’s share is growing this year in its product categories.

“We are not gunning for short term, pushing product.”

Asked what he’d like New Zealand retailers to know, Brun emphasised collaboration. He says Procter & Gamble is focused on working with retailers to provide innovation for in-store design and enhance the shopping experience, using its knowledge in category management from other markets.

“We need to work together,” he says. “I don’t think any retailer in New Zealand is happy with 1 percent growth on our categories.”

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