White Clouds could bring rain on P&G

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Procter & Gamble Co.'s renegade orphan is haunting the company again as Wal-Mart Stores launches a test of the White Cloud store brand in two new categories-laundry detergents and fabric softeners.

White Cloud, a toilet-tissue brand P&G discontinued in the early 1990s, became a Wal-Mart premium private label in 1999 for toilet tissue and diapers. The world's largest retailer licenses White Cloud from Paper Partners, a Boca Raton, Fla., company that staked claim to the brand shortly after P&G dropped it.

Last week, Wal-Mart began rolling White Cloud liquid and powder laundry detergents, liquid fabric softeners and dryer sheets in Midwest stores.

The move pits White Cloud against P&G's most core business and two of its 10 biggest global brands-Tide laundry detergent and Downy fabric softener.

"We work with our [retail] customers to meet their needs, and we realize that sometimes those needs go beyond our brands," a P&G spokeswoman said. "We respect Wal-Mart's decision to do what it needs to do for its business."

The White Cloud brand will co-exist with Wal-Mart's first private-label laundry detergent, Sam's American Choice launched in 1999 to compete with such value brands as Dial Corp.'s Purex and Church & Dwight's Arm & Hammer. The new line is positioned more against category-leading Tide. It's priced about $1 less than Tide and other premium brands but more than $2 above value brands.

Ad plans for White Cloud laundry products couldn't be determined, though Wal-Mart ran TV and print ads for White Cloud diapers in 1999 via Omnicom Group's GSD&M, Austin, Texas. A spokesman for Wal-Mart declined to comment.

"At a strategic level, it's not something that we fear," a Unilever spokesman said of the White Cloud expansion. "It forces you even more to be No. 1 or No. 2 in the category, which makes you innovate more and work harder."

The laundry detergent and fabric-softener categories have combined annual U.S. sales of more than $6.3 billion, compared with $4.3 billion for diapers and $4.4 billion for bath tissue.

P&G executives have privately acknowledged that White Cloud has been a major factor in a surge for private-label diaper sales in recent years. Private label has risen from 15.1% of the category in third quarter of 1999 to 21% in the first quarter of 2001 in the wake of Wal-Mart's White Cloud launch, according to ACNielsen data reported by J.P. Morgan Securities. The gains have been more modest in toilet paper, with private-label share up 0.7 points to 12.3% over the same period.

Private-label shares have been smaller, though also growing, in laundry categories, making up only 3% of liquid and 2.6% of powdered detergent sales and 10.2% of fabric softeners in the first quarter of 2001.

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