LONDON—The shampoo wars are back.
Hair has been a key battleground for consumer-products makers, with shampoo offering healthy profit margins and opportunities to innovate by adding minor ingredients. Women have also proved willing to spend on hair brands that offer credible benefits.
“There’s been a very vibrant and competitive battle in hair care in North America,” said Unilever Chief Financial Officer Graeme Pitkethly. “I don’t think it’s going to be a quick win for us.”
The tussle cut into Unilever’s sales in the third quarter. Underlying sales growth—a closely watched figure that strips out currency movements and deals—was 2.9%. That’s down from a rate of 3.8% last year and below analysts’ forecasts of 3% growth. Unilever also blamed a tough comparison with a year ago when—among other things—hot weather in Europe buoyed ice cream sales, for the slowdown. Total reported sales were €13.25 billion ($14.64 billion) for the quarter, up from €12.53 billion a year earlier.
While Unilever, which also owns Hellmann’s mayonnaise and Ben & Jerry’s ice cream, raised prices for its products in many markets, Mr. Pitkethly said the rivalry with P&G had capped increases in North America. Prices rose just 0.6% in the region, compared with a 1.5% increase a year earlier.
P&G is “very focused on the fundamentals” in hair care after “a very lackluster period,” he said. “We give credit to P&G for the quality of their execution and innovation in this space.”
Both companies have lost share of the U.S. hair-care market in recent years. Unilever’s market share dropped to 17.1% last year from 17.6% in 2017, while P&G fell to 13.9% from 14.6% over the same period, according to Euromonitor. L’Oréal SA, the market leader, has also lost share in the U.S. Big companies are increasingly facing competition from niche, salon brands that reach shoppers through Instagram and Facebook.
Shampoo is a particularly important market for Unilever, which has shifted its focus toward personal-care products over the past decade. Its new chief executive, Alan Jope, previously ran its personal-care arm.
During that period, Unilever bought several personal-care business, including VO5 and TRESemmé maker Alberto Culver Co. and the TIGI professional hair-care business. Armed with its new range of shampoos, Unilever went on the attack in the U.S., taking on P&G on its home turf. Unilever’s North American hair-care business now comprises about 3% of global sales.
The rivalry between the two companies over hair goes way back. In 2001, the companies struck a multimillion-dollar settlement after P&G admitted spying on Unilever’s hair-care division.
More recently, Unilever has doubled down on digital marketing to win in hair. It launched a YouTube channel that offers styling tutorials and has used social media to gather consumer insights to inspire into new products. It has also launched bar shampoos under its Love, Beauty and Planet brand, eliminating plastic packaging.
P&G has also been on the offensive, rolling out its Herbal Essences and Aussie hair brands globally. The company has said it is focused on improving products, packaging, communication and distribution. It has launched a new rose water sulfate-free shampoo under its Pantene brand and tweaked the formula and packaging for Head & Shoulders.
Write to Saabira Chaudhuri at email@example.com
Corrections & Amplifications
Unilever’s market share dropped to 17.1% last year from 17.6% in 2017, according to Euromonitor. An earlier version of this article incorrectly said its market share fell compared with 2016. (Oct. 17, 2019)
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