Reckitt claims private-label competition has not ‘materially’ impacted its sales

Reckitt has claimed its brands are seeing little material impact from private label competition, even as it continues to make price increases.

The company, which owns brands like Vanish, Strepsils and Durex, told investors today it is confident it will continue to maintain market share against private label competitors despite price hikes.

In the UK, many consumers are switching to private-label brands after ten months of double-digit price increases in grocery products. The latest figures from Kantar show own-label sales were up by 13.5% year-on-year for the four weeks to 16 April 2023. The very cheapest value private label lines grew by even more, up 46% year-on-year, according to the Kantar study.

Despite the growth in UK and in many other European markets, interim CEO Nicandro Durante told investors on a call today (26 April) that Reckitt’s brands were well-placed to maintain market share due to their premium positioning and because the business operates in sectors where there is less elasticity (consumers shifting brands due to price changes).

“I don’t see downtrading as a significant issue for us, because in inelastic categories,” he said.

He gave the example of the company’s Vanish brand, where prices have been increased 12% in the quarter, but there was little impact of volumes sold. Even in more discretionary categories where the business operates, such as haircare, it is maintaining volumes through innovation to reach consumers, as well as the “familiarity” of its brands.

While the company hailed a “fantastic performance” in maintaining market share across its categories, it did see a 4.5% decline in volume in its first quarter of 2023. Like-for-like value sales did grow by 7.9%, driven by the impact of price increases, with a 4.5% price mix in the period. Total revenue for the company was £3.92bn, up 14.4% on an actual basis.

Across Reckitt’s three business units, the hygiene sector saw the most significant volume decline of 10.4%, with products like Dettol seeing fewer sales post-pandemic. Health was the only segment which delivered volume growth in the quarter, seeing a 1.2% increase.

How Durex evolved its innovation pipeline to keep up with cultural shifts

It was also announced  Kris Licht, its current president of the health business unit and global chief customer officer, will take over from Durante as CEO in  May. Licht is a former chief transformation officer at the business and before that spent five years at PepsiCo.

Durante said his biggest achievement during his 18 months as interim CEO was keeping “the ball rolling” on the company’s “iconic brands”, and stated the company is in “great shape” for future success.

One area of progress he highlighted was in the company’s innovation processes. He noted the company had “invested heavily” in its product superiority and its R&D pipeline.

“What I think we have fine-tuned this year is how to deliver innovation, how to reach the end consumer in a smarter way, at right time and at the right price point,” he stated.

The company reiterated its previous assertion that it expects to “significantly increase” its brand equity investment (marketing support) in the remainder of the year “to support an exciting innovation programme”.