TAMPON GIANTS SQUARE OFF FOR LEGAL BATTLE

Playtex Sues P&G Over New Product Rollout

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CINCINNATI (AdAge.com) -- Procter & Gamble Co. is rolling its premium-price Tampax Pearl tampons into stores nationally
in late August despite a lawsuit from rival Playtex Products claiming the product infringes a patent.

Tampax is the leader in the $577 million tampon category, with a 40.2% share, according to Information Resources Inc. figures that exclude Wal-Mart Stores and club and dollar stores. Playtex has a 30.2% share, but has been gaining steadily against Tampax, which has lost share steadily since P&G acquired the brand in 1998, when it enjoyed a 45% share.

Taking a swipe at P&G
In a conference call with analysts today, Playtex CEO Michael Gallager took another swipe at his rival, saying Pearl performed poorly when test-marketed Lexington, Ky., this year, gaining only a 4% to 6% market share -- "virtually none of it incremental to Tampax" -- while Playtex gained share.

A P&G spokeswoman said the company was pleased with results of the Lexington test, which took place in February, and that Playtex's suit is without merit.

Playtex alleges in a suit filed last month in U.S. District Court in Cincinnati that the Tampax Pearl plastic applicator infringes a 16-year-old Playtex patent.

Playtex has had plastic-applicator products for several years, and Mr. Gallagher said his company has been tracking the Pearl product since it was originally tested by Tambrands, the brand's former owner, more than four years ago. "We may know as much about Pearl, in some ways even more, than P&G," he said, adding that he does not anticipate a major threat to Playtex's market share nationally.

$40 million campaign
P&G is backing Pearl with an estimated $30 million to $40 million in ads for from Bcom3 Group's Leo Burnett Co., Chicago, to break in October as part of a $50 million-plus marketing effort.

Mr. Gallagher said Playtex will respond by increasing promotion and ad support for its eponymous tampon brand from Grey Global Group's Grey Worldwide, New York. Playtex spent more than $32 million on tampon ads last year, according to Taylor Nelson Sofres' CMR.

P&G is seeking up to a 40% price premium for Pearl, based in part on the category's first claims of improved protection since withdrawal of P&G's Rely tampon brand in 1980.

'Unbelievable comfort'
P&G is not claiming Tampax Pearl improves absorbency, which has been strictly regulated by the U.S. Food and Drug Administration since the 1980s after super-absorbent tampons were linked to dozens of deaths from toxic shock syndrome. But Tampax Pearl, which began hitting store shelves in late February, does claim "unbelievable comfort and protection" from a fundamentally new design. Like other feminine products, Pearl has received FDA approval.

Pearl features the category's first absorbent braided string to help prevent leaks when women change tampons, a P&G spokeswoman said. The tampons also are designed to expand side-to-side rather than all around to improve comfort.

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