PG Procter and Gamble Co

P&G shifts pitch to appeal to millennials who 'don't know what the product is for'

By Sharon Terlep 

Procter & Gamble Co. has a fabric-softener problem.

Sales of the product -- an often sweetly scented liquid designed to make clothes feel better after a wash -- have been declining for more than a decade, hurt by improvements in modern washing machines and laundry detergents, as well as heartier fabrics able to withstand more washings without additives.

The Cincinnati consumer-products giant, which commands more than half the $1.3 billion U.S. market for liquid softener with Downy and Gain, says a new generation of shoppers, the coveted millennials, have accelerated the decline. Shailesh Jejurikar, P&G's head of global fabric care, told analysts recently that most millennials "don't know what the product is for."

Fabric softener was popularized in the U.S. in the 1960s to solve a common complaint that laundry emerged from washing machines feeling rough and scratchy. But those complaints have been less common following changes in detergents and washing machines that have reduced the harshness of washing.

At the same time, popular athletic gear often comes with instructions to avoid using softener because it can reduce the ability of fabric to lift and trap moisture.

The result: U.S. liquid softener sales fell 15% between 2007 and 2015, with sales of P&G's market-leading Downy brand down 26% in that period to $598 million, according to Euromonitor.

For P&G, the problem weighs on in its largest division, fabric care, at a time when the company has been struggling to offset slowing growth of its popular laundry pods. After years of deep cost-cutting and scant growth, P&G is under pressure to deliver sales gains.

P&G's organic sales -- a closely watched metric that strips out currency moves, acquisitions and divestments -- have been growing 1% to 3% annually for the last several years. In the years leading up to the recession P&G's organic sales growth ranged from 5% to double-digit gains.

Millennials and "eco-conscious" consumers are looking to limit the amount of chemicals they use in their homes, dealing softeners another blow, said Bibie Wu, vice president of fabric conditioning for Germany's Henkel AG, which acquired Sun Products Corp., maker of Snuggle fabric softener.

Some consumer and environmental advocates contend softener is one of many household products that contains potentially unhealthy chemicals. P&G and Sun maintain their products are safe. Downy offers a softener free of dyes and perfumes, and Sun said scent- and color-free products are a growing part of its portfolio.

Karen Repeckyj Vecchione, a 44-year-old mother of three from Doylestown, Pa., stopped using liquid softeners and many other household products after becoming pregnant with her first daughter seven years ago. "I changed a lot of my cleaning substances then," she said. "I wanted her to have a good, toxin-free start to life."

P&G views millennials as a prime target for increasing softener sales because consumers in that age group are just beginning to form their laundry habits, either because they are living on their own for the first time, buying a first washing machine or having children, said Nate Lawton, associate brand director for P&G's North America fabric-care unit.

To that end, P&G changed the wording on its packaging last year. It now refers to the product as "fabric conditioner," hoping to draw a parallel to hair-conditioner as an integral part of many hair-washing regimens. The company says liquid softener improves longevity of clothes by protecting them in the wash, and makes laundry look and smell better.

"Conditioning is the most intuitive and familiar way to talk about this benefit for consumers," said Mr. Lawton.

P&G and its laundry-aisle rivals also are trying to fight the downward slide with explanatory ad campaigns touting the benefits of softener, which costs about $3 to $4 for a 50-ounce bottle.

One recent Downy spot features footage from a GoPro video camera inside a washing machine. A man's foreboding voice describes how doing laundry "wreaks havoc" on clothes, "crushing them with 60 times the G-force of a rocket launch and baking them in a dryer that can get hot enough to cook ribs."

It is a commercial designed for consumers like Nicholas Stephan, a 26-year-old from Fort Wayne, Ind., who grew up using only detergent. Frustrated that his clothes were getting worn out faster than he could afford to replace them, Mr. Stephan recently went to the store in search of a product that would help. After trying dryer sheets and other items he realized he was buying the wrong products. "It turns out I really needed fabric softener," Mr. Stephan said.

Both P&G and Henkel said softener sales are responding to the marketing push and have improved in recent months. That also is because of new offerings such as so-called scent boosters -- small beads that consumers put in washing machines to keep clothes smelling clean longer. U.S. softener sales across all brands were up 5% for the 12 months ended Oct. 1 compared with a year earlier, according to Nielsen ratings.

To significantly boost sales, consumer-products companies should focus on wooing more traditional customers, a feat that likely would require profit-eroding discounts that P&G and rivals have tried to move away from, said Kurt Jetta, CEO of TABS Analytics, a retail- and consumer-analytics firm.

Still, Mr. Jetta says it will be hard to convince American families to spend more on laundry. "Even if you are affluent or have above-average income, it's an area where people are looking to save money," he said.

Write to Sharon Terlep at sharon.terlep@wsj.com

(END) Dow Jones Newswires

December 17, 2016 02:47 ET (07:47 GMT)

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