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Procter & Gamble to Widen Naturals Line With This is L. Buyout

Zacks Equity Research

The Procter & Gamble Company PG, popularly known as P&G, has taken another step in expanding its naturals product range, which is a key focus area for most day-to-day consumer product companies at present. The company acquired a private company — This is L. — which produces period products with natural ingredients. The financial terms of the deal remained under covers.

The L. brand portfolio mainly includes feminine hygiene products like high-quality tampons, pads, liners and wipes made of organic cotton. The company also produces condoms.

This is the latest in the series of P&G’s acquisitions in this year. The acquisition fully compliments the company’s Always and Tampax brands for women. Further, the companies share a common mission of boosting confidence of girls and serving more women. P&G believes that the addition of the L. brand’s products to its Feminine Care business — within the Baby, Feminine and Family Care segment — will not only aid growth but also improve its exposure in the naturals segment.

As already mentioned, the naturals business has been a great attraction for consumer goods companies dealing in personal and home hygiene products. Another company that is steadfastly expanding footing in this segment is Colgate-Palmolive Company CL. By the end of 2018, Colgate successfully rolled out its naturals toothpaste offerings in 79 countries. The company continues to expand the naturals toothpaste offerings, based on local insights, with the launch of the charcoal range across many countries. Further, the Colgate Vedshakti line is witnessing increased market share gains in India. Additionally, the naturals range is a key area of focus for the company’s personal and home care categories.

Meanwhile, This is L. will gain from P&G's proficiency, scale and resources that will boost opportunities to expand across global borders. The L. brand products are already available in more than 5,000 stores across the United States, including Target Corp. TGT and CVS Health Corp. CVS. The company also sells products online through its website ‘thisisL.com.’ as well as Amazon.com AMZN.

Furthermore, This is L. is a purpose-driven brand, which donates one This is L. product to needy girls and women across the globe against every product sold.

In conclusion, the This is L. brand’s existing reach and popularity should meaningfully contribute to P&G’s Feminine care business.

The news did not materially impact the share price of P&G. Nonetheless, this Zacks Rank #2 (Buy) stock has rallied 19.1% in the past year, gaining from the company’s robust surprise trend, upbeat outlook, and efforts to improve products, packaging and marketing initiatives as well as focus on productivity and cost-saving plans. These factors led the stock to outperform the industry’s growth of 10.1% in a year.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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