Makers of tissue, garbage bags and soap are all feeling the pain of weaker consumer spending, although some may be getting pinched more than others.

Friday, detergent and diapers maker Procter & Gamble Co. (PG) cut its sales projections for the fiscal year, pushing the stock down 5%. The Cincinnati giant's results came just one day after Colgate Palmolive Co. (CL) beat earnings expectations and said it would meet Wall Street's forecasts for 2009.

Reports from the two companies and other competitors suggest that even within consumer staples the greatest pressure is being felt by companies with more discretionary portfolios or bigger exposure to private label competitors. The trend highlights just how much cash-strapped consumers are trading down even on daily goods and products that have relatively low price points.

Procter & Gamble in recent years has put fresh focus on higher-end products - like fragrances - making parts of its business more vulnerable to cut backs in discretionary spending. The company's brands include names like CoverGirl cosmetics and Olay creams. Last year, the maker of Tide detergent and Crest toothpaste made a deeper push into the high-end beauty segment with the purchase of luxury hair-care company Frederic Fekkai & Co. The company also sells premium fragrances through tie ups with brands like Hugo Boss.

"Procter's product line as they've made acquisition has become a little more discretionary," said Walter Todd, a portfolio manager at Greenwood Capital Associates, which holds shares of both P&G and Colgate. He said he thinks Procter has more exposure to private label and to North America than Colgate.

Todd says if had to pick one of the two stocks at the moment he would be "more inclined (toward) Colgate at this point than P&G." Procter & Gamble's shares are down 10% for the year and Colgate has lost 4%.

Another large consumer staples company, Kleenex tissue maker Kimberly-Clark Corp. (KMB), reported a drop in net earnings amid softer sales of products like paper towels, a segment where cheaper private label brands have been strengthening in the recession.

Cheaper private label, or store branded, products have gained share in many categories during the recession.

"P&G is in more categories than Colgate that are more susceptible to private label, like batteries," said Caris & Co. analyst Linda Bolton Weiser.

Colgate sells in segments like bodywash and toothpaste that are relatively immune to private label penetration, said Bolton Weiser. By contrast, Kimberly Clark and P&G sell products like paper towels and diapers that tend to be more susceptible to private label.

P&G said Friday that private label shares in its categories across North America and Western Europe have continued to increase modestly, but are up less than 1% and that its own market shares are stable.

Bolton Weiser also pointed to a strong performance by another consumer product company, personal care products maker Alberto-Culver Co. (ACV). Alberto-Culver - which sell affordable brands like VO5 haircare products - recently exceeded Wall Street's earnings estimates for its fiscal first quarter.

Still, P&G said on a conference call Friday its beauty business is holding up quite well in the current environment relative to others in this industry. The company said volumes in its retail hair care business grew low single-digits with a broad-based growth across all its major brands, including Pantene. But its cosmetics volume declined, and although the company continues to build share in prestige fragrances, volume fell in that segment as well.

"Our markets in aggregate continue to grow. There has been some contraction in discretionary categories such as fine fragrances. Some consumers are trading down, but our strategy of offering consumers a range of choices within a product category is working," said P&G Chief Financial Officer Jon Moeller.

-By Anjali Cordeiro, Dow Jones Newswires; 201-938-2408; anjali.cordeiro@dowjones.com

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