Sales data since the recall began March 16 reveals Iams lost more sales and market share than any other industry player. The brand's sales dropped 16.5% in the eight-week period ended April 22, according to Information Resources Inc. data reported by Morgan Stanley. That compared to a 15% decrease for private-label offerings and a 2% decline for Del Monte Foods, the two other players buffeted most.
By contrast, Iams' most direct competitor, Colgate-Palmolive Co.'s Hill's Science Diet, saw sales rise 12% in the first quarter, the brand's best performance in four years. (P&G didn't disclose its pet-food sales numbers last quarter.) In a conference call with analysts, Hill's credited its crisis-communications program, though it also had far fewer products involved in the recall. "We really reacted well," Chairman-CEO Reuben Mark said. "I think that is coming back to us in robust sales."
Recall worsens Iams' struggle
Iams already had started to struggle with share losses before the recall, but its decline accelerated following the crisis. It had been losing share in IRI-tracked channels for four months prior to the recall, but its losses grew to 0.9 points in the four weeks ended March 25, then doubled to 2.2 points in the four weeks ended April 22.
That marks six straight months where Iams not only lost share, but lost share by ever-increasing amounts each month. It's a reversal for a brand that had more than four years of unbroken monthly share gains since 2000.
Of all the acquisitions P&G has made in the past 20-plus years, Iams was the one that stood out as delivering an instant boost to the topline, and one that kept growing sales and share for a near-company record. But the performance of the pet-food business had Morgan Stanley analyst Bill Pecoriello indicating in a note last week that P&G stock might do better if it were divested.
A P&G spokesman declined to comment on the numbers or how P&G handled the crisis.