Signs of an improving economy might be in your kitchen or bathroom cupboards. Consumers are showing a willingness to pay a little more to get Colgate toothpaste, Kellogg’s Frosted Flakes and Gillette Fusion shavers.
That’s good news for the economy and the multibillion-dollar companies that make those products and have been battling to keep shoppers from trading down to store brands to save money.
Colgate-Palmolive, Kellogg and Procter & Gamble all gave upbeat earnings reports and even stronger outlooks for next year Thursday, a day that also saw the announcement that U.S. gross domestic product rose for the first time in a year.
“The strongest brands are the most resilient to economic stress and the first to bounce back as soon as consumers can pay for it, because they don’t want to trade down,” said Allen Adamson, managing director of branding firm Landor Associates. “They want to get what they want.”
The companies are taking different paths to strength:
• Colgate-Palmolive has stuck to its guns on price increases made in the past year and emphasized heavy advertising, helped by a weak ad market that has made such marketing cheaper.
• Kellogg, which has mostly benefited from consumers looking for cheap meals and eating at home more, has also spent heavily on marketing.
• Tide detergent and Pantene shampoo maker P&G, which has been stung by customers switching to cheaper options, has cut prices and launched cheaper versions of some products, including Pampers diapers. The Associated Press
