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Frugality could wrinkle P&G profits

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Steve Chiotakis: Another bright spot in all this economic doom-and-gloom has been the world of consumer products. Yesterday, Colgate-Palmolive reported profits of nearly a half billion dollars in the fourth quarter. Analysts also expect favorable earnings from rival Proctor & Gamble. But could frugal customers derail the notion of a presumed recession-proof industry? From North Carolina Public Radio, here’s Marketplace’s Janet Babin.


Janet Babin: It’s hard to avoid Procter and Gamble products, even if you try. The company makes everything from Oil of Olay to Tide laundry detergent. It can count 23 brands with revenues over $1 billion.

Being diversified and global helps the company weather recessions. But some P and G brands are losing out to cheaper generics.

Analyst Lauren DeSanto with Morningstar says P&G’s beauty products, like Pantene and Olay, are failing the frugal consumer test:

Lauren DeSanto: What constitutes the must-have? What is discretionary and what is not?

But even if a product passes that test, P and G is being hurt by what people have in their pantry. Broke consumers are shopping their closets first and buying only at the last minute.

I’m Janet Babin for Marketplace.

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