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Will a German laundry import give Walmart leverage with P&G?

Written by Tom Ryan

Backed by TV commercials, Walmart has brought Persil, one of Europe's most popular premium laundry brands, to the U.S. as an exclusive.

Walmart has said it is introducing the line, from Germany's Henkel Corporation, to deliver more options to consumers. But a Wall Street Journal article asserts Walmart is looking to gain some leverage against P&G, which accounts for 60 percent of all sales in the U.S. laundry detergent market and 85 percent of the category's profits.

Laundry is a key store traffic driver and P&G's Tide is ubiquitous at not only at Walmart's direct competitors but drug stores, dollar stores, Staples, Home Depot and elsewhere. With its recent re-commitment to being the "low-price leader", Walmart is looking for better pricing and promotions to stand out in the category and earn a fatter margin in laundry.

But P&G's dominant position has allowed the company to be largely immune to negotiating tactics. Last year, P&G raised prices on some Tide varieties by reducing the amount of detergent and number of loads per container. Persil, launched in March, sits alongside Tide on Walmart's shelves and is similarly priced.

"If Persil sales do well, Walmart can shift the balance of power," Susan Lee, a former P&G employee and now a consultant at Simon-Kucher & Partners, told the Journal.

[Image: Persil ProClean]

While largely unknown to Americans, Henkel, which competes with P&G's Ariel brand overseas and distributes Purex detergent in the U.S., has already released three television commercials to support Persil. The lighthearted commercials feature "Mr. Professional," a tuxedo-wearing cleaning expert with a "no-nonsense, down-to-business, and intent on one thing — getting out stains." So far, he's saved a dress shirt from a wine spill at a yacht party and a dress from a chocolate smear at a girl's birthday party.

The launch received some good press in June when Persil took over the top spot in Consumer Reports' laundry detergent ratings from Tide based largely on tests on red wine, chocolate and grass stains.

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