CHICAGO – Procter & Gamble Co. (PG) Monday said it is changing the manufacturing formula for some of its products to work around shortages of raw materials, including petroleum.
Supplies of key commodities like petroleum and coffee have been disrupted by recent hurricanes in the United States.
But while P&G has had to allocate limited amounts of coffee to retailers, other products are being shipped in line with retail demand, P&G management said during a meeting with analysts to discuss the company's acquisition of razor and battery maker Gillette Co (search).
"The only thing I know that's on allocation is coffee," P&G Chairman and Chief Executive A.G. Lafley said. The company makes Folgers and Millstone coffee, as well as hundreds of household and personal care products.
For other products, P&G is able to substitute ingredients, management said. For example, with petroleum supplies tight, the company is able to substitute ingredients like coconut oil in some products.
Lafley also said P&G, as the industry leader in many of its categories, is "at the first seat at the table" with its suppliers when it comes to buying scarce raw materials.
He said that even if rising oil prices were to slow the economy, P&G should do well. Consumer-product companies tend to fare better during an economic slowdown or recession than other companies, because consumers do not consider those items luxuries that can be cut from their budget.
"In times of retrenchment, in times of recession, our kinds of companies tend to do pretty well, because most of what we sell is considered essential," Lafley said.
P&G shares were up 3 cents at $59.49 Monday on the New York Stock Exchange (search).