Procter & Gamble is talking to retailers about plans for a new bargain version of its flagship Tide laundry detergent. Three years ago P&G scrapped a lower-priced Tide Basic, fearing cannibalization

Updated September 3, 2013, 7:12 p.m. ET

P&G to Test Waters Again on a Bargain Tide

Cheaper Liquid Detergents Are Growing; Company Scrapped Earlier Effort

PAUL ZIOBRO

Procter & Gamble Co. PG -0.18% is trying again with a lower-priced Tide. In a move that could set off price battles in the laundry aisle, Procter & Gamble is talking to retailers about plans for a new bargain version of its flagship Tide laundry detergent, people in the industry said. One person said the product may be a liquid detergent called Tide Simple, a name P&G considered when it tried a low-price Tide several years ago. It would be priced just above rival bargain brands, such as Church & Dwight Co.’s CHD -0.30% Arm & Hammer. P&G declined to comment. A decision to offer a lower-priced version of the premium brand carries the risk that buyers of regular Tide could trade down and stay there.Indeed, three years ago P&G scrapped a lower-priced powdered detergent called Tide Basic, which was tested for about a year. P&G said consumers were having a hard time distinguishing between the bargain version and the regular priced variety. The company’s concern was that regular Tide users would trade down to Tide Basic, for instance, but be unhappy that it didn’t clean as well as regular Tide.

“They would cannibalize down and be unhappy,” P&G’s ex-CEO, Bob McDonald, said in an interview in March.

It’s unclear how P&G intends to get around that problem with the new product. Still, a budget-oriented brand would fit with new Chief Executive A.G. Lafley’s oft-repeated mantra that the consumer is the boss, and consumers are increasingly drifting toward lower-priced liquid laundry detergents.

In the year ended June, 41% of U.S. households were buying value-priced laundry brands, while just 29% who were buying premium brands, according to Nielsen data cited in an investor presentation Tuesday by Church & Dwight.

Since 2009, the value tier is the only segment of the liquid laundry detergent category that has grown. The value-segment’s dollar share grew to 29.2% from 25.9% during that time, according to Church & Dwight. Premium and mid-tier brands, meanwhile, lost share.

A lower-priced Tide would compete against not just Arm & Hammer, and other budget brands, such as Henkel AG’s HEN3.XE -0.66% Purex, but also private-label detergents, which already ring up good margins for retailers, one former retail executive said.

P&G is the leader in the North American laundry detergent market with more than $4.5 billion in annual sales. Rivals and retailers have speculated in recent weeks that the company would come out soon with a successor to Tide Basic.

P&G has built a range of prices into its Tide brand. One of the company’s most successful new products in years has been Tide Pods, launched in early 2012, which packs the detergent into pre-dosed capsules that cost more than regular Tide liquid. But P&G’s low-end Era brand hasn’t made much of a dent in Church & Dwight’s controlling share of the value segment.

Other executives in the industry have said that P&G’s move down market would be bad for the category.

“It’d be a terrible mistake, I think, if they pulled the price lever on some of their businesses,” Church & Dwight Chief Executive Jim Craigie said at an investor conference this summer. “Nobody wins a price war game.”