Procter & Gamble Co. (PG) sees adult incontinence as its next new category, analysts say

Bernstein Research forecasts $800M in new revenue

CORRECTION: Story modified to correct the name of incontinence product divested by P&G.

CINCINNATI - Procter & Gamble Co. recently announced plans to enter a new product category to stimulate sales growth. Two Wall Street analysts say the most likely target is adult incontinence.

“We think P&G is most likely to enter the incontinence market in North America, Western Europe and Asia,” Ali Dibadj wrote in a June 27 report to Bernstein Research clients. “We think the company could see about $800 million in incremental sales from incontinence in the next few years.”

Goldman Sachs analyst Jason English speculated that P&G will attack the incontinence problem "from a different angle" than the adult diapers that now dominate the market.

"A patent published in April suggest P&G has developed a new device designed to be inserted into a woman's vagina to support the bladder and prevent leakage," English wrote in a June 30 report. "Similar devices are used in medical communities, but we are unaware of any mass produced offerings."

P&G spokesman Paul Fox declined to comment on the reports.

Chief Financial Officer Jon Moeller told analysts that the company would enter a new product category in the next six months that would “move the needle” on sales and address “a chronic consumer issue.” Moeller added the new product would “improve existing offerings in meaningful ways to cumulatively build consumer preference.”

P&G competed in the adult diapers market in the 1990s, but sold its Attends line in 1998.

Dibadj said the adult incontinence market generates $7 billion in revenue globally and grew at a high single-digit rate in the last decade. Sweden’s SCA Group would be P&G’s biggest rival in the three continents where Dibadj thinks the company will compete, followed by Kimberly-Clark and Unicharm.

Dibadj estimates SCA generates $1.2 billion from the sale of adult incontinence products and holds a 56 percent market share in Western Europe. Kimberly-Clark holds 57 percent market share in the U.S., where it generates nearly $1 billion in revenue. Unicharm has a 40 percent market share Asia Pacific, with $947 million in sales.

“Our assumption is that P&G can get an incremental 5-15 points of market share in these regions over the next two-three years,” Dibadj wrote. “With $1.4 billion in incremental sales available due to market growth over the next few years, even a significant share grab by P&G would allow most other major players to continue growing.”

Dibadj predicts P&G will generate $80 million in annual profits from the new adult incontinence product, boosting earnings per share by three cents over the next several years.


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