Procter & Gamble plans to increase prices of diapers by about 4% next year, executives announced during the company’s fourth quarter earnings announcement this week. The increase will help offset higher commodity costs, shipping expenses and currency exchange rates.
According to CFO, Jon Moeller P&G will work with packaging sizing and innovation to pass through the price increases. P&G will also hike prices of its Bounty paper towels, Charmin toilet paper and Puffs tissues. The increases will begin rolling out in October and be fully in place by February 2019.
Sales in P&G baby care business, dropped 2% during the fourth quarter due to market conditions like the transportation strike in Brazil, softness in Saudi Arabia and inflations issues and market retraction in parts of Africa. The business has also been challenged by aggressive moves by private labelers and inventory adjustments in more developing areas, including North America.
However, the past year has not been without its bright spots for the world's largest diaper manufacturer including a return to share leadership in mainland China, 34% growth in India and the launch of the Pampers Pure Protection line, which achieved share leadership in the natural baby diaper market within weeks of its April introduction.
P&G also holds the leading marketshare globally of pants-type diapers, which is the fastest growing style globally. “This positions us well as the market shifts to this type of product globally.”
P&G CEO David Taylor told analysts he believes that the market will accept these price increases given the rise of commodity pricing in recent quarters combined with the superiority of P&G’s diapers.
“When executive well, superior products command higher pricing and we have excellent examples of this,” he says.