Reckitt Credits High Adspend With Boosting Sales

28 April 2008

SLOUGH, UK: Anglo-Dutch household goods giant Reckitt Benckiser posted sales growth of 11% in the first quarter of 2008 to some $30 billion (€19bn; £15bn).

North America and Australia both yielded double-digit improvements, a success attributed by ceo Bart Becht to the company's high levels of marketing spend. 

Becht said one of the key reasons for Reckitt's first quarter growth was the "substantial investment" in adspend made by the company in the last quarter. 

He stated that adopting such a strategy, which had been criticised by some analysts in the wake of the economic downturn, "has paid off in spades in the first quarter in terms of growth on our power brands behind our innovations. In the first quarter, we also have had very strong investment behind the franchises."

As a result, Reckitt raised its estimated annual sales growth to 7%–8% from its previous target of 6%–7%, although Becht has also confirmed that while adspend will remain high for the rest of the year, it will not be at the same level as the last two quarters.

Procter & Gamble and Unilever have yet to report their first quarter figures, while Kimberley-Clark registered Q1 growth of 5%, as did L'Oréal – although that included a 4% dip in North America – with Johnson & Johnson's personal care division also posting mixed results.

Some observers have also argued that sales growth in this sector in the last quarter may have benefitted from retailers purchasing in higher numbers in anticipation of price hikes over the next three months.

Data sourced from Ad Age online; additional content by WARC staff