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Package-goods giants, stung by steep downturns in many formerly booming overseas economies, are looking more intently to product launches in the U.S. for near-term growth.

That means such recent introductions as Procter & Gamble Co.'s Physique haircare line -- now testing in the U.S. but considered to be a potential global brand -- could be the wave of the future, at least for the next few years, according to industry analysts.

P&G, in fact, has scrapped its Marketing Breakthrough 2000 program in North America in favor of a blitz of new products. That project aimed to rein in marketing expenditures.


It's not just U.S.-based marketers that are paying more attention to this market. Unilever, P&G's Anglo-Dutch archrival, is turning up the heat in the U.S., with the $82 million launch in March of Thermasilk heat-activated haircare products; a new line of Suave liquid hand soaps and instant hand sanitizers coming this month; and the expected rollout early next year of a "natural" skincare line.

"Without a doubt, you're seeing more and bigger new-product launches" in the U.S., said Amy Low Chasen, an analyst with Goldman, Sachs & Co.

She said the activity is "probably separate from the Asia/Latin America [economy] issue," although she added "the timing is pretty good."

Package-goods marketers have said they aren't giving up on Asia and Latin America. But their recent efforts are clearly geared toward growth in healthier, developed markets.

"Our volume is 72% in Western Europe and North America, so we're still pretty heavily skewed toward those markets," P&G President Durk Jager told analysts earlier this month, trying to defuse concern over P&G's exposure in Asia and Latin America. "It's critical we pick up the pace of growth in North America and Western Europe. For that reason, many of our new products should and will have particular appeal for those developed markets."


Only two years ago, P&G executives' main focus was extending established U.S. brands globally, and some analysts said doing that could more than offset P&G's then-lackluster record in domestic launches.

Today, though P&G hasn't given up on globalization, the company touts activity on its home turf: Six new brands launched into test market or national distribution in the past year.

Colgate-Palmolive Co., working to overcome a reputation as a power in Latin America but a weakling in the U.S., has made clear gains through new products in its home country.

"Consistent with our strategy overall in the U.S., we have really driven growth with new products and consumer relevance," said Tarek Hallaba, exec VP-marketing for Colgate-Palmolive U.S. and former marketing chief for Colgate in Latin America.

One of its big successes has been Colgate Total, which landed in the U.S. late last year after the toothpaste brand had been established overseas.

Total has been Colgate's biggest U.S. launch, with projected first-year sales in this country of $100 million, and has given Colgate brand leadership over P&G's Crest in the $1.5 billion U.S. toothpaste category.

Colgate also has made U.S. share gains in light-duty dishwashing liquids, antiperspirant/deodorants and body washes through new products, Mr. Hallaba said.

"I would say Total is a home run and we've got a number of singles, doubles and triples to complement it," he said.


Emphasis on new products in the U.S. is a strategy adopted four years ago, rather than a short-term reaction to global economic pressures, Mr. Hallaba noted.

"It really started in 1993-94, when we realized that maybe category growth was not there and maybe we needed to innovate to drive the top line," he said. "We have a pipeline of innovation [coming] over the next few years."

The increased focus on the U.S. by many marketers is likely to come at the expense of marketing and acquisition spending in the troubled regions of Asia and Latin America, said Burt Flickinger, a consultant with Reach Marketing.

But he does expect both P&G and Unilever to continue investing in developing markets. "Outside of P&G, Unilever, Frito-Lay and Coca-Cola [Co.], everyone else is really retrenching and focusing on driving U.S. operating results, to try to keep [stock] valuations high," Mr. Flickinger said, adding that in doing so "they're going to be missing the global opportunities."

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