The move is designed to allow P&G to focus more intensely on maintaining the market share lead of its Pampers brand in Europe and is in line with the company's global policy of stripping out second tier brands.
Part of that "less is more" strategy entails the reduction of worldwide ad budgets from 25% of revenues today to 20% by the 2000.
The losing agency this time is Michael Conrad & Leo Burnett, which holds the Luvs European account, though there has been no advertising since Spring. Saatchi & Saatchi handles the Pampers business across Europe.
"We will in future concentrate our quality improvements on one diaper brand only in order to continue to be market leader in the diaper business," says Christel M Karesch, spokeswoman for P&G in Germany - the company's biggest market outside the U.S..
The demise of Luvs in Europe is in stark contrast with its performance in the U.S. where volume sales were in June reported to be at an all time high and where the mid-priced brand was upgraded to become Luvs Stretch (with stretching side panels) just this summer. U.S. analysts have suggested, however, that Luvs' success has hit Pampers' sales harder than those of competitor brands.
In Europe, where retail brands are a much stronger and growing force, Luvs has not received product revamps since the late 80s when the race for technological improvements in the diaper market took off and P&G ploughed its NPD investment into Pampers. Further competition to Pampers then arrived in Europe in 1993 in the form of P&G's great U.S. diaper rival - Kimberly-Clark's Huggies.
Pampers currently holds 50% of the $600m retail market (excluding Aldi) in Germany, according to Nielsen. It is backed by a $16m ad spend. Luvs launched in Germany as a premium brand following a two-ear test market at the end of the 70s. Its market share has now fallen to 6%.
Leo Burnett Chicago handles Luvs in the U.S., while D'Arcy Masius Benton & Bowles New York has the Pampers business.
Copyright October 1996, Crain Communications Inc.