FMCG

Global FMCG giant says it faces significant supply chain pressures

By our News Team | 2021

Proctor & Gamble, one of the world’s biggest advertisers, is increasing product prices to help offset rising costs but won’t cut its adspend.

Global FMCG giant Proctor & Gamble (P&G) says it is facing heavy pressure on its global supply chains and, as a result, is trying to offset the increased costs in various ways.

These include increasing product prices to consumers and re-evaluating its advertising strategies. While it won’t cut is adspend, the company intends to prioritise different advertising channels.

Procter & Gamble via Wikimedia Commons

Discussing its first quarter earnings this week, P&G said inflation and higher costs for producing and shipping goods had impacted profits. Although revenue for the quarter was ahead of expectations, it warned supply chain pressures would weigh heavy on its performance in the year ahead.

The company has already raised prices in some product categories, such as baby care, but confirmed more were on the way in its beauty, oral care and grooming categories as it struggles with rising commodity costs.

Marketing strategy will be adjusted

These negative pressures will ill also impact its advertising and marketing strategy for the immediate future.

P&G is said to be the biggest FMCG advertising spender in the world, and while other brands cut or halted spend through the pandemic, it maintained its investment into brands. In the year to June 2021, spend was up 12% to $8.2bn. In this first quarter, marketing spend was up another $130m.

The company’s Chief Financial Officer, Andre Schulten, justified the ongoing costs by saying consumers were turning to trusted brands and premium products, and with hefty marketing efforts it has been able to capitalise on that shift in behaviour and cement its superior positioning to ensure its products are still in demand as prices creep up post-pandemic.

Schulten emphasised that P&G will continue to invest in marketing and promotions. “As long as we create good ROI we will continue to invest,” he said.

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