P&G Plans Bargain Version of Tide

But it could erode premium Tide sales and start a price war

   

tide185Sources tell the Wall Street Journal that Procter & Gamble is discussing the launch of a new discount liquid detergent with retailers.

The new product would be a lower-priced version of its popular Tide laundry detergent, possibly called Tide Simple. It would mark the second time in several years that Procter & Gamble has attempted to launch a bargain brand for Tide.

Clean Up With Whirlpool Spreads
Clean Up With Whirlpool Spreads

In 2010, the company cancelled plans to launch Tide Basic, which had been in development for more than a year. In research, Procter & Gamble found that consumers confused the discount brand with the higher-priced flagship detergent. Consumers also expressed dissatisfaction with the bargain brand’s cleaning performance.

Fears that a discount version of Tide could cannibalize regular Tide sales remain. However, with a lingering sluggish economy, many consumers have become budget-conscious and a discount version of the popular detergent could find a ready market. Recent Nielsen market research data showed that only 29% of U.S. households purchased premium brands over the past year, compared to 41% of homes that bought discount laundry detergents.

Procter & Gamble generates $4.5 billion annually from detergent sales in North America. Introducing a lower-priced version of Tide could increase pricing pressure in the segment, possibly igniting a price war with other manufacturers.

Tide isn’t only popular with consumers. The detergent has become a sort of underground currency among thieves due to the ease with which it can be exchanged for cash.

Shares of Procter & Gamble slipped slightly in Wednesday morning trading.


Article printed from InvestorPlace Media, http://investorplace.com/2013/09/pg-plans-bargain-version-of-tide/.

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