P&G spent $130m (£94m) on marketing in the first quarter of its financial year, while reporting a 5% increase in net sales to $20.3bn (£14.6bn). pound sterling).
P&G is committed to continuing to invest in marketing despite continued supply chain pressures that are driving up business costs and, therefore, product prices.
Speaking on an investor call today (October 19) detailing the company’s results for the first quarter of its 2021/22 financial year, COO and new CEO Jon Moeller highlighted the positive results from P&G and said “it’s time to move forward, not back” when asked if marketing investments would be sacrificed to offset the price hike.
The company is raising prices for its oral care and skincare products as it expects headwinds in the transportation of goods and products, which are expected to net giant FMCG a $2.1 billion bill and $200 million respectively during the year.
Nonetheless, P&G increased its marketing spend by $130 million in the first quarter.
Chief Financial Officer Andre Schulten added: “We believe this is a difficult period of temporary growth, not a reason to reduce investment in the business. We stick to a strategy that worked well before and during the Covid crisis. »
A supply chain squeeze is affecting all FMCG companies, due to rising Covid-19 cases in Asia and a labor shortage in the United States.
Efficiency begets effectiveness, effectiveness begets expense, and all of this stimulates the market and business.
Jon Moeller, P&G
Overall, the first quarter of the financial year saw P&G achieve net sales of $20.3bn (£14.6bn), a 5% year-on-year increase .
Moeller noted that premiumization is an ongoing trend in the FMCG space, with the pandemic prompting consumers to spend on quality brands, even in categories that are seeing price increases.
“During the pandemic, consumers have shifted their consumption in these categories to well-performing and trusted brands. You see that even in what’s happening with private label market shares, for example, [which are] in the United States in the last six to twelve months, [and] in Europe during the same period,” he said.
“None of this is a guarantee for the future, but we are leaving in a very good position, with a strong superiority profile, [and] a strong program of innovation and investment to continue this work.P&G and Coke’s Pandemic Performance Proves It: You Don’t Cut Ad Spend in a CrisisWhile FMCG is not reducing its marketing investments, it will aim to optimize its marketing strategy by increasing digital media spend in all markets.
“We believe there is still significant opportunity to optimize our ability to reach consumers more broadly and more effectively at a significantly lower cost,” Schulten said. He added that the company is getting better at targeting customers with relevant messages in digital marketing.
“[We will] increase the percentage of digital media globally, as we continue to optimize our own algorithms to target consumer-facing messages.
Moeller added, “It may seem like a strange dynamic, but the more effective and efficient we can make our marketing spend, the more attractive it becomes to make those investments. In a strange way, efficiency begets efficiency, efficiency generates expenditure, and all of this stimulates the market and the company.
Elsewhere, e-commerce now accounts for 14% of P&G’s sales and that includes sales through channel partners such as Target and Walmart, which play a “significant role” in the company’s digital sales growth.
Schulten explained that the company is “well positioned” in e-commerce for multiple reasons such as its strong brand portfolio which has proven popular as premiumization has accelerated under Covid, which has in turn helped its brands to appear on the first page of search engine results.