Procter & Gamble Faces Flak from Venezuelan Government Over Sanitary Pad Prices
Government claims US consumer goods producer charging “criminal” prices for a fifth of national minimum wages.
Procter & Gamble (NYSE:PG) has been blamed by the Venezuela government. The latter claims that the US consumer goods giant is selling the sanitary products at one fifth of the national minimum wage.
The Cincinnati-based company has introduced its new brand, Always Postparto, in the Venezuelan market at a price of 1389 bolivars per pack, which translates into $3.50 on the black market, but at a whopping $220 at the government’s strongest official rate, which expectedly invited a strong condemnation from the government. The country’s government accuses foreign organizations, especially from the US, in committing economic war against the Venezuelan people, through hoarding, price gouging, and smuggling.
P&G did not wasted its time in retaliation, by pointing out that the Always Postparto sanitary towels were just one of a range of brands and products on offer, and that the basic Always product is available at less than 20 bolivars, which is 7000 times cheaper. Postparto pads, on the other hand, are meant for those women who had just given birth and that it was a specialized product with relatively higher associated cost.
Wild price disparities are common occurrence in Venezuela, where the government issues strict price control list to keep prices from spiraling out of control, but importers play smart by pegging the price of imported products at the equivalent of the black market. Prices for most the goods are ridiculously cheap for those who get their bolivars in the black market, but it is notoriously expensive for the vast majority of middle class Venezuelans who earn in official local currency.
The South American country is going through a rough economic crisis from widespread basic commodity shortages that has forced many to resell their scarce goods at a premium to make ends meet and to complement their minimum wage of 6747 bolivars per month. To worsen the matters is the inflation rate that was officially pegged at less than 70% last year, and economists expect that climb triple that this year.
P&G’s stock price ended the day at $80.80, a gain of less than 1% from the previous day, following reports that P&G is a step closer to selling its beauty division to Coty Inc. at a value of $12 billion free from tax. If the deal goes through, then that will help P&G to get rid of its hair care products, such Gucci and Hugo Boss, Max Factor, and Cover Girl cosmetic brands.
