Alberto-Culver, the maker of St. Ives and Noxzema, cut second quarter ad spending by 14.5 percent. But that didn't stop bargain-seeking consumers from purchasing its salon-level haircare products, resulting in a major boost for brands like Tresemme and Nexxus.
The company reported today (Monday) that second quarter sales fell 1.4 percent to $344.3 million, compared with $349.4 million for the year-ago period. CEO V. James Marino, however, said he was optimistic about his family of brands, including a highly anticipated marketing campaign and makeover of St. Ives in the fourth quarter.
Advertising and promotional spending decreased as a result of “lower media rates, a shift in the U.S. to higher trade promotional spending and lower investment in St. Ives” as the company readies for its late summer/fall launch, Marino said in an earnings call this morning. Thus far, Alberto Culver has spent $14 million on advertising in 2009, excluding online, per Nielsen. Last year, it spent $109 million.
Alberto Culver is no Procter & Gamble or Unilever when it comes to spending, but its strategy in a recession is to go after the salon-driven consumer. Women might be less prone to go to the hairdresser, instead, they're more likely to splurge on an occasional bottle of Nexxus Dualiste or Tresemme 24 Hour Body for the same results, according to the company.
These two brands—Tresemme and Nexxus—have fared particularly well in tough times. Tresemme posted double digit sales growth in the U.S. and overseas. Nexxus also saw “strong sales growth” in its latest quarter, per Alberto Culver.
Sales of other brands, such as Alberto VO5, decreased by “low single digits,” Marino said, due to discontinued styling items. Additionally, St. Ives fell by “mid-single digits,” in part because last year’s introduction of Elements—a line of natural ingredient-based scrubs and cleaners—didn’t “gain the traction at retail we’d hoped for,” he said.
All that will soon change, Marino said, adding that the brand now has a new team and an agency behind it. (Alberto Culver ditched Campbell Mithun, Minneapolis, and hired a new lead agency: Wieden & Kennedy, Portland, Ore.) In addition to a makeover of St. Ives, the company will also reorganize some of the high-performing SKUs of the Elements line under the St. Ives trademark. “St. Ives has a lot of positive consumer attributes, and we think we’ve come a long way to begin to unlock a message that will resonate with consumers,” Marino said.
Regarding current consumer buying habits, Marino said haircare shoppers tend to buy heavily based on promotion. One reason why its brands are doing well, compared to brands with much lower “opening price points,” is because consumers are willing to take the "opportunity to move up to something [they] believe to be of a higher quality and image, and it doesn’t cost [them] as much as it used to," Marino said.
Separately, the company next year will kick off a major campaign for Noxzema, which it acquired from P&G last fall for $81 million. The effort, Marino said, will focus on “what Noxzema is all about to current and future users of the brand.”