Tuesday, October 21, 2008

Consumers buy generic

Why wouldn't the consumer trade down? They traded down in shopping, and now they are trading down in personal care items and detergent and toilet paper.

Oct. 21 (Bloomberg) -- Procter & Gamble Co. and Colgate- Palmolive Co. led U.S. consumer companies in raising prices to counter higher costs, taking the risk that consumers would switch to generic brands if they raised them too much.

Last quarter, the risk didn't pay off, as generic brands attracted consumers beset by higher food and fuel costs.

U.S. sales of store-brand household and personal-care products rose 8.9 percent in the four weeks ended Oct. 4, according to a study by Bernstein Research. By contrast, sales of products such as soap and dish detergent increased by 2.3 percent at P&G and 1.3 percent at Colgate, according to the Oct. 17 report. In the year-earlier period, sales of private- label products increased 2.4 percent, according to Bernstein.

Battered by increased expenses, consumers are stretching household budget dollars by slowing purchases of higher-priced products like P&G's Bounty paper towels and Kimberly-Clark Corp.'s Kleenex facial tissues. Kimberly-Clark will report earnings tomorrow.

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