Tuesday, September 14, 2004

Profits flow in from Pur brand

Water research pays off for Procter & Gamble

By Cliff Peale
Enquirer staff writer

It's a strange source of profits, but water is working for Procter & Gamble Co.

P&G's Pur purification and filtration products are tapping into new markets in the United States and around the globe. Some make money, and some are targeted to people in the world's poorest economies and victims of the biggest natural disasters.

But they both tap into water research that has been a staple at P&G for years and now is paying off with the Pur business.

Gregory Allgood, Procter and Gamble's associate director of safe drinking water, demonstrates Pur's new water filtration.
(Enquirer photo/MEGGAN BOOKER)
"If you have enough money, you'll buy bottled water. Or hopefully you'll use Pur," said Greg Allgood, associate director of safe drinking water at P&G, who is helping roll out water-purification packets in the developing world.

"But for this product, we need to make it a price people can afford."

Filtration and purification

It's been five years since P&G bought the Pur name with its $265 million acquisition of Recovery Engineering Inc. in September 1999. The business is divided into two parts:

• Water filtration: In North America, the company sells the full range of water filters that fit onto a kitchen faucet, filtered pitchers and other products. Last spring, it started selling filters on Kenmore refrigerators.

Like many P&G products, it is aimed at a consumer willing to spend more for a premium product - in this case, a younger, more health-conscious consumer.

The business is growing by more than 10 percent a year and already is competing with Brita for market leadership.

The marketing hook is that the filters can provide the purity of bottled water for about 15 cents a gallon, about 10 percent of the cost of bottled water, said Clark Reinhard, associate marketing director overseeing the business at P&G.

While Reinhard would not give sales figures, he said the business has doubled since P&G bought it as part of its personal health care unit. And only about one-fifth of the market uses water filtration equipment, Reinhard said.

"It's a very good business, and it's only grown up in the past decade or so," said Peter Censky, executive director of the Water Quality Association outside Chicago. "The way I look at it, there's more than one faucet in every house."

• Water purification: In the developing world, P&G already has sold more than 10 million packets of powder, using the Pur name, that can purify dirty water in about 10 minutes.

Most of the packets so far have gone for emergency relief in countries such as Sudan, Chad and Ethiopia. To relief groups, P&G is selling the packets at cost, about 3.5 cents each.

But this year, Procter is experimenting with a new "commercial" model to sell the packets in Pakistan, meaning that it's trying to earn a profit. It eventually will charge up to 10 cents a packet, paying for distribution and retailers' profit. It's hiring more than 1,000 people to do demonstrations.

There also is a "social model" under way in Haiti and soon will be in Uganda. The main goal of that program is to educate consumers about clean water.

'Dirt magnet'

In all of these models, consumers can pour a packet of the powder into 10 liters of dirty water and stir for several minutes as the dirt gathers at the bottom. After pouring through a cloth and waiting 20 minutes, they then can drink the water.

The technology works like a "dirt magnet," Allgood says, by sucking the dirt out of the water and forcing it to pull together into a mass that gathers at the bottom of the container, to be filtered out.

Allgood has been performing the tests around the world, and he said the results can help in countries where dirty drinking water is among the leading causes of disease. Globally, it is estimated that more than 3.5 million people a year die from illnesses related to drinking unclean water and more than 1 billion lack access to a safe water supply.

Allgood said P&G still is testing how far this part of the Pur business can go.

"We're going to learn about each of these models," he said.

Clean water recipe

Procter & Gamble's Pur water-purification and -filtration products tap into the company's water technology and research to clean drinking water in developing countries, during natural disasters and for other uses.

To use:

• Pour a packet of the powder into 10 liters of dirty water.

• Stir for several minutes. Dirt will gather at the bottom as it is sucked into a mass.

• Pour through a cloth or other filter. Wait 20 minutes.

• Result: water that is clean and safe to drink.

Source: Procter & Gamble


E-mail cpeale@enquirer.com

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