The brand extension, which would have been unthinkable for many companies a few years ago, is an acknowledgement of an ongoing dual threat: that of supermarket own-label ranges and the rise of hard discounters in Western Europe. It is also a chance to generate fresh revenue streams in growing markets for years to come.
P&G could have continued to ignore own-label, but discounters such as Aldi and Lidl - the fastest-growing retail channel across Europe - have proved too much of a threat to overlook. Hard discounters are 100% own-label and there is
a good chance that if their rise continues, branded-goods firms such as P&G will be ringfenced as high-margin and high-priced.
Pampers is not the first brand with which P&G has experimented by adding a value range, but it is the most significant, and the first launch of its kind in the UK. Simply Dry nappies launched in Germany in January, and have been rolled out in
a few other European markets. Will a strategy of launching cheaper lines change the competitive landscape among brands and retailers? Very likely. It could even lead to this new category of brands being carried in retailers like Aldi.
While it is not without its risks (an issue we explore on page 2) it does open up the possibility of attracting new consumers in emerging markets, who hitherto could not afford P&G's brands. If the more premium brands become available to this group, it could present a massive growth-market for companies that take this route.