Meanwhile, some of Suave's premium-price rivals, primarily Procter & Gamble Co., are taking a bath. P&G last month cut prices across its entire hair-care line, by as much as 33% for some products after sales flagged early this year. Analysts believe Suave's surge played a role in that move.
But Ralph Blessing, category director of Suave, said the brand's success is more than just consumers responding to low prices amid a slowing economy. Suave often gets little respect because it's not a big advertiser, Mr. Blessing admits, but both respect and advertising may be growing.
"The economy certainly has helped," said Mr. Blessing, noting Suave's hair-care sales are up 22% this year. But he said Suave has averaged 10% annual growth over the past 13 years for its product line, which includes hand soap, body washes, skin cream and body lotion, giving it a 60% U.S. household penetration few brands can match.
Mr. Blessing said U.S. factory sales of Suave could reach $650 million this year, and retail sales will top $700 million. Two years ago, Suave was rumored to be for sale, though Unilever never confirmed that. Now, the brand is what Howard Green, Unilever chief of investor relations, recently called one of the company's "local jewels" that will get emphasis even as Unilever winnows its portfolio. While well over 80% of Suave's sales come from North America, it has expanded into Latin America, Turkey and Australia. Mr. Blessing said Unilever is considering expansion elsewhere.
Suave, along with premium-price Dove, is one of two "master brands" spanning multiple categories for Unilever Home and Personal Care in the U.S., Mr. Blessing said. Suave runs a close second to Dove at Unilever and ranks fourth in dollar sales among all U.S. personal-care brands, he said.
Still, Mr. Blessing acknowledges this year's media budget is "fairly modest," including $10 million to $15 million in TV advertising and another $5 million in a print campaign targeting youths and Hispanic consumers for its Suave Naturals subline of heavily fragranced products, all via WPP Group's Ogilvy & Mather Worldwide, Chicago.
"We've recognized [advertising] as an area where we've underinvested," Mr. Blessing said, "and as the brand grows and continues to become more profitable and bigger, that's certainly an area that will get more investment."
Suave has stepped up new- product efforts, unleashing a stream of fragrances and other items in its Naturals and Kids shampoo lines, both of which have seen sales grow more than 50% in the 52 weeks ended July 15, according to Information Resources.
Overall, Suave attained a 10.3% U.S. share in June of the hair-care categories in which it competes, which total more than $4 billion, and 10.9% in July, Mr. Blessing said.
Retailers are more eager to merchandise value brands in a softer economy, which is helping Suave emerge from the bottom shelves, he said. Suave's Naturals line sells everyday for 97 cents at Wal-Mart, and retail promotions have pushed prices below 80 cents in recent months there as well as at Kmart and Target stores.
But Mr. Blessing said Suave is also getting better retail support because of improvements in distribution efficiency and a strong trade marketing plan, which includes such in-store promotions as a "The Price Is Right" game show inside Wal-Mart stores. Data from Leemis Marketing, which tracks trade deals, show Suave hasn't boosted trade allowances to get more merchandising support this year. Suave even raised list prices to retailers 2%-12% earlier this year.
Jim Gingrich, analyst with Alliance Capital Management's Sanford C. Bernstein, sees Suave's recent gains as primarily a price story. "The economy's soft," he said. "It's a good value. It's not anybody aspiring to the Suave [cachet]."
But Ken Harris, a partner in consulting firm Cannondale Associates, said Suave's success goes beyond the economy. "They've been able to capture the essence of higher-priced brands and deliver that to a more value-minded consumer."
Ann Gillin Lefever, analyst with Lehman Brothers, said Suave's new-product efforts have "reawakened the brand." But consumers appear to be trading down throughout home and personal care, she said. "Private label is our fastest-growing `manufacturer' right now."