P&G Cracks Down on Diversion

Procter & Gamble is set to launch a new Sebastian hair care range for salon professionals in July. To keep the 33-SKU line where it belongs, P&G, like John Paul Mitchell Systems before it, has embarked on an ambitious program to deter diversion.

All salons that carry the new Sebastian products must sign a contract that said they would be pay a penalty if they diverted any products.

“Susan Arnold [P&G vice chairman, Beauty & Health] was very supportive of us cleaning up the professional market to protect the growth of the brand and to protect the salon channel and its integrity,” said Kevin Otero, general manager of P&G Professional Care North America, in a recent article in Women’s Wear Daily.

According to Mr. Otero, 10-30% of a salon’s revenue comes from the sale of products. Sales of these products outside the salon force many businesses to go bankrupt each year. To keep that from happening, P&G introduced the independent contracts and is determined to follow through with contract breakers.

Since the crackdown, sales of P&G professional products in retail channels fell 15% in the most recent 52 weeks, ended April 12, according to ACNielsen.