Upside to P&G’s Laundry Products Market Share

Procter & Gamble (NYSE:PG) competes with Unilever (NYSE:UL), Clorox (NYSE:CLX), and Colgate-Palmolive (NYSE:CL) in the fabric care market. Despite fierce competition, we believe P&G will be able to push its share higher with its focus on developing markets and “green” products initiatives.

P&G’s market share in the fabric care business has grown over the past few years led by global acquisitions, aggressive marketing and constant product innovation. P&G’s global laundry market share is around 31%. Under its fabric care business, P&G sells laundry detergent products like Tide, Gain and Ariel – each brand contributing above $1 billion in annual sales – as well as fabric softeners like Bounce and Downy, and bleach products.

While we believe P&G share in the global laundry market will increase towards 33% by the end of our forecast period, Trefis community members predict that P&G’s share will approach 38%

We maintain a price estimate of $83.81 for Procter & Gamble’s stock.

Emerging Markets Key to P&G’s Growth

P&G  is a market leader in developed markets like the U.S., Western Europe and Japan. However, these markets are competitive and have limited growth potential due to saturated consumer demand and relatively lower population growth rates. The economies in emerging nations like Brazil, India and China are rising with higher population rates and rising income levels of middle class families.

In a recent press release related to Q2 earnings, P&G said that its household care volumes, which includes fabric care and home care, increased by double digits in developing regions and mid-single digits in developed regions. ^[1] The company also commented that fabric care volume was up by mid-single digits due to market growth in developed regions, as well as an increase in the company’s market share due to strategic initiatives.

Innovative and Greener Products

P&G is focusing on eco-friendly laundry products that reduce the consumption of water for washing clothes. Demand for specialized fragrances have also caught up with consumers. P&G has introduced several laundry care products with its Febreze brand, which originated as an odor-control product. Demand for fabric softeners are growing as fast as laundry detergents. Fabric softeners are mainly used for protecting delicate garments from heavy wash loads as well as protecting garment color.

See our full analysis and $83.81 price estimate for Procter & Gamble

Trefis Community Forecast

Trefis community members anticipate that P&G’s global market share for laundry products will increase from 32% in 2009 to nearly 38% by the end of our forecast period, compared to the baseline Trefis estimate of an increase towards 33% during the same period. The member estimates imply a small upside to our $83.81 price estimate for Procter & Gamble’s stock.

1. P&G Press Release, Jan 27, 2011 [↩]