Snack, Deodorant Makers Target Cost-Conscious Shoppers With New Brands and Sizes

“The threat of recession is starting to impact consumer confidence and change spending patterns and behaviors,”

Alan Jope,

chief executive of Hellmann’s mayonnaise maker

Unilever

UL 0.49%

PLC, said when reporting earnings last week.

Procter & Gamble Co.

PG 2.87%

on Friday said consumers are using up products they stockpiled during the pandemic and holding off on replenishing supplies, as well as shifting to store brands. The Tide owner forecast that consumer-goods industry growth would slow by a percentage point or more from the last fiscal year’s 5%.

Executives at companies from Evian water owner

Danone SA

DANOY 0.14%

to Huggies diaper maker

Kimberly-Clark Corp.

KMB 2.72%

say they have been monitoring shopper data and preparing for a possible downturn. Surging inflation means this isn’t as simple as just ramping up promotions.

Unilever has already launched bundled versions of brands such as Degree deodorant and Suave shampoo in the U.S. that are more affordable on a per-ounce basis, while holding prices steady for small sizes of some brands such as Dove soap. It also introduced new variants of personal-care brands—including premium ones such as SheaMoisture hair-care—that it thinks will appeal to consumers cutting back on visiting salons.

“We are seeing a mix,”

Esi Eggleston Bracey,

U.S. president of Unilever, said. “We are seeing premiumization continue and demand increase in our more accessible price points.”

Ms. Bracey said she and other company executives have been trying to determine what a recession might look like, given that many consumers still have jobs and high savings. During the pandemic, people became used to pampering themselves at home rather than using professional services, a shift normally seen during a downturn.

“The shower, we’ve learned, can be a place of retreat, people don’t have to go out to a spa,” Ms. Bracey said.

This year, Unilever began selling a new Shea shampoo and conditioner—a virgin coconut oil-based product in a 34-ounce bottle for $17.99—that will be sold only at

Costco

from early August. In January, it launched a new brand called “Madam” for

Walmart

that includes hair-care products for under $10 a bottle.

The company has also launched a collection of hair stylers under its TRESemmé brand aimed at consumers who might otherwise visit a salon. Rolled out nationally in January, the tools promise benefits such as volume, hold and heat protection.

During recessions, consumers make fewer impulse purchases and often plan shopping lists online, said Ms. Bracey. As such, Unilever has been working to better optimize its content for search, including modifying the names of some of its products, she said. For example, it recently added the words “More Moisturizing Than Bar Soap” to the name of its “Dove Beauty Bar Sensitive Skin” product to capitalize on the relatively high search ranking of the term bar soap.

Other companies are also tinkering with their brands in anticipation of a downturn.

Kraft Heinz Co.

KHC 1.63%

is launching items such as $1 Lunchables and 10-packs of Kraft Mac & Cheese to appeal to cost-conscious consumers.

PepsiCo

is stocking some stores with more low-price snacks such as Santitas tortilla chips.

While some shoppers, especially from lower-income households, are trading down as they face more financial pressure, in other areas spending has held up and companies say they are seeing growth.

Many consumer-goods companies are banking on what is sometimes called “the lipstick effect”—the idea that during recessions people buy themselves affordable treats such as lipstick or chocolate as they pull back on big-ticket items.

“Our products are really an affordable luxury in the U.S.,”

Lavanya Chandrashekar,

finance chief of Johnnie Walker maker

Diageo

DEO 0.43%

PLC, said Thursday. While the last financial crisis resulted in some downtrading, it didn’t take long for sales of pricier alcohol to recover, she said. So far, Diageo isn’t seeing any signs that consumers are trading down, she added.

Kimberly-Clark CEO

Michael Hsu

said last week that while some shoppers were trading down others were “still looking for better quality and premiumization.” The Kleenex maker is “skating to where the puck is,” he added.

To target shoppers who want to trade down, Mr. Hsu said there were “a host of moves” that the company could make, such as pushing smaller package sizes. Kimberly-Clark, however, is being “very cognizant” not to move too much in this direction since plenty of consumers are still willing to buy premium products, he said.

Companies have also highlighted the importance of continuing to invest in marketing and research and development to convince consumers to keep paying higher prices for their brands. Along these lines, Danone on Wednesday said it had upgraded the formula and packaging for its Activia, Oikos and Silk yogurt ranges in North America.

Americans have so far been willing to pay more for its products but executives are prepared for this to change,

Shane Grant,

who leads Danone’s North American operations, said.

Danone has a raft of products and promotions ready should consumers begin to demand lower-cost offerings, Mr. Grant said. Because getting new products on store shelves can take months, the Paris-based company has also prepared marketing strategies, promotional offers and smaller packaging sizes aimed at consumers looking to cut costs, he said.

Mr. Grant said the opposing forces of a purchasing power squeeze but high employment and savings made it hard to discern what would happen. Consumer behavior, he said, “is certainly really hard to predict.”

—Sharon Terlep contributed to this article.

Write to Saabira Chaudhuri at [email protected]

“The threat of recession is starting to impact consumer confidence and change spending patterns and behaviors,”

Alan Jope,

chief executive of Hellmann’s mayonnaise maker

Unilever

UL 0.49%

PLC, said when reporting earnings last week.

Procter & Gamble Co.

PG 2.87%

on Friday said consumers are using up products they stockpiled during the pandemic and holding off on replenishing supplies, as well as shifting to store brands. The Tide owner forecast that consumer-goods industry growth would slow by a percentage point or more from the last fiscal year’s 5%.

Executives at companies from Evian water owner

Danone SA

DANOY 0.14%

to Huggies diaper maker

Kimberly-Clark Corp.

KMB 2.72%

say they have been monitoring shopper data and preparing for a possible downturn. Surging inflation means this isn’t as simple as just ramping up promotions.

Unilever has already launched bundled versions of brands such as Degree deodorant and Suave shampoo in the U.S. that are more affordable on a per-ounce basis, while holding prices steady for small sizes of some brands such as Dove soap. It also introduced new variants of personal-care brands—including premium ones such as SheaMoisture hair-care—that it thinks will appeal to consumers cutting back on visiting salons.

“We are seeing a mix,”

Esi Eggleston Bracey,

U.S. president of Unilever, said. “We are seeing premiumization continue and demand increase in our more accessible price points.”

Ms. Bracey said she and other company executives have been trying to determine what a recession might look like, given that many consumers still have jobs and high savings. During the pandemic, people became used to pampering themselves at home rather than using professional services, a shift normally seen during a downturn.

“The shower, we’ve learned, can be a place of retreat, people don’t have to go out to a spa,” Ms. Bracey said.

This year, Unilever began selling a new Shea shampoo and conditioner—a virgin coconut oil-based product in a 34-ounce bottle for $17.99—that will be sold only at

Costco

from early August. In January, it launched a new brand called “Madam” for

Walmart

that includes hair-care products for under $10 a bottle.

The company has also launched a collection of hair stylers under its TRESemmé brand aimed at consumers who might otherwise visit a salon. Rolled out nationally in January, the tools promise benefits such as volume, hold and heat protection.

During recessions, consumers make fewer impulse purchases and often plan shopping lists online, said Ms. Bracey. As such, Unilever has been working to better optimize its content for search, including modifying the names of some of its products, she said. For example, it recently added the words “More Moisturizing Than Bar Soap” to the name of its “Dove Beauty Bar Sensitive Skin” product to capitalize on the relatively high search ranking of the term bar soap.

Other companies are also tinkering with their brands in anticipation of a downturn.

Kraft Heinz Co.

KHC 1.63%

is launching items such as $1 Lunchables and 10-packs of Kraft Mac & Cheese to appeal to cost-conscious consumers.

PepsiCo

is stocking some stores with more low-price snacks such as Santitas tortilla chips.

While some shoppers, especially from lower-income households, are trading down as they face more financial pressure, in other areas spending has held up and companies say they are seeing growth.

Many consumer-goods companies are banking on what is sometimes called “the lipstick effect”—the idea that during recessions people buy themselves affordable treats such as lipstick or chocolate as they pull back on big-ticket items.

“Our products are really an affordable luxury in the U.S.,”

Lavanya Chandrashekar,

finance chief of Johnnie Walker maker

Diageo

DEO 0.43%

PLC, said Thursday. While the last financial crisis resulted in some downtrading, it didn’t take long for sales of pricier alcohol to recover, she said. So far, Diageo isn’t seeing any signs that consumers are trading down, she added.

Kimberly-Clark CEO

Michael Hsu

said last week that while some shoppers were trading down others were “still looking for better quality and premiumization.” The Kleenex maker is “skating to where the puck is,” he added.

To target shoppers who want to trade down, Mr. Hsu said there were “a host of moves” that the company could make, such as pushing smaller package sizes. Kimberly-Clark, however, is being “very cognizant” not to move too much in this direction since plenty of consumers are still willing to buy premium products, he said.

Companies have also highlighted the importance of continuing to invest in marketing and research and development to convince consumers to keep paying higher prices for their brands. Along these lines, Danone on Wednesday said it had upgraded the formula and packaging for its Activia, Oikos and Silk yogurt ranges in North America.

Americans have so far been willing to pay more for its products but executives are prepared for this to change,

Shane Grant,

who leads Danone’s North American operations, said.

Danone has a raft of products and promotions ready should consumers begin to demand lower-cost offerings, Mr. Grant said. Because getting new products on store shelves can take months, the Paris-based company has also prepared marketing strategies, promotional offers and smaller packaging sizes aimed at consumers looking to cut costs, he said.

Mr. Grant said the opposing forces of a purchasing power squeeze but high employment and savings made it hard to discern what would happen. Consumer behavior, he said, “is certainly really hard to predict.”

—Sharon Terlep contributed to this article.

Write to Saabira Chaudhuri at [email protected]