P&G Update: Tapping Further Into Latin American Laundry Market

Procter & Gamble (NYSE:PG) opened a new detergent production plant in Peru last week, which will more than triple Peru’s production capacity and help deepen P&G’s market share in Latin American laundry market. P&G leads the global laundry detergent market with a share of around 32% as of 2010, up from 30% in 2007. 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. It competes with Unilever (NYSE:UL), and Colgate-Palmolive (NYSE:CL) in the fabric care market.

See full Trefis analysis for P&G here

Peruvian Plant: Tapping the Shift in Demand from Developed to Developing Markets

The upcoming $30 million Peruvian detergent production facility is expected to triple P&G’s production capacity in Peru and will serve the expanding domestic market and export demand to regional markets, especially Chile, Ecuador, Argentina, Brazil and Bolivia. Euromonitor International forecasts the growth in global market for laundry products to be at 3% until 2012, with Asia and Latin America being key drivers and as consumer demand in developed markets like the U.S. and Europe becomes saturated. Latin America currently generates 9% of P&G’s sales.

Laundry care products accounted for 53% of the overall home care industry sales in 2009. Trefis estimates P&G’s global market share for laundry products increased from 30% in 2007 to 32% in 2010, and estimates the laundry care business to account for 22% of P&G’s current stock value. Growing disposable income of consumers in emerging markets such as Asia and Latin America would boost demand for powdered/liquid detergents as consumers shift from traditional hand washing to using machine and laundry services.

The current Trefis price estimate for P&G’s stock is $71.56, a 10% premium over the market price.

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