The Procter & Gamble Company (P&G) boasts dozens of billion-dollar brands for home, hair, and health. The world's largest maker of consumer packaged goods divides its business into five global segments. The company also makes pet food, water filters, and over-the-counter acid-reflux medication. About two dozen of P&G's brands are billion-dollar sellers, including Always, Braun, Crest, Fusion, Gillette, Head & Shoulders, Mach3, Olay, Oral-B, Pantene, and Wella in the beauty and grooming segment, as well as Bounty, Charmin, Dawn, Downy, Duracell, Gain, Pampers, and Tide in the household care segment. P&G's hundreds of brands are available in more than 180 countries.

Geographic Reach

P&G has operations in some 70 countries worldwide. It generates about 39% of its revenue from its business in the US and Canada. P&G's remaining revenue comes from Western Europe, Asia, Latin America, and Central & Eastern Europe/Middle East/Africa (CEEMEA). 

To support its US operations, P&G owns and operates 32 manufacturing sites across more than 20 states and territories. Additionally, it also owns and operates 100-plus production facilities in 40 other countries. Typically its domestic and international manufacturing sites produce products for multiple P&G businesses.

Operations

P&G operates its business globally through five segments -- Beauty; Grooming; Health Care; Fabric Care and Home Care; and Baby Care and Family Care.

The company's Beauty segment (which accounted for 24% of fiscal 2014 sales) makes and markets a variety of products, including deodorants, cosmetics, and skin care. The world's top facial skin care brand, Olay enjoys a 10% global market share. The Beauty segment also holds leadership positions worldwide in the hair care and color market, boasting a more than 20% global market share across its Pantene and Head & Shoulders brands. Within the prestige sales channel, P&G competes with its prestige fragrances and the SK-II brand and is the global market leader in prestige fragrances with help from its Dolce & Gabbana, Gucci, and Hugo Boss fragrances. The company is expanding its luxury fragrance offering with a new licensing agreement with designer Stella McCartney. P&G began selling her fragrances in fall 2013.

Through its long-established Gillette franchise, which boasts the Fusion, Mach3, Prestobarba, and Venus brands, P&G's Grooming segment has captured about a 70% stake in the global blades and razors market. The company's electronic hair removal devices, such as electric razors and epilators, sell under the Braun name worldwide. The Grooming segment (generating 10% of sales) has achieved a 20% share of the male shavers market and a more than 40% stake in the female epilators market.

P&G's Health Care segment, which brought in 9% of sales in 2014, includes oral care, feminine care, and personal health care products. Nearly all of its personal health sales outside the US are generated through the PGT Healthcare partnership with Teva Pharmaceuticals Ltd.

The Fabric Care and Home Care segment (32% of 2014 sales) comprises laundry detergents, additives, and fabric enhancers, as well as dishwashing liquids and detergents, surface cleaners and air fresheners, batteries, and pet care.

Boasting a 30% global market share, the company's Baby Care and Family Care segment makes and markets diapers and baby wipes. The segment generated 25% of P&G's 2014 revenues.

Aside from its primary business as the world's top consumer products company, P&G operates in sectors most consumers don't consider. To establish itself in the commercial cleaning niche, it operates the P&G Pro Line Lodging Program, an in-room cleaning and on-premise laundry (OPL) and daily-cleaner service. (P&G's Pro Line cleaning products -- which are strategically part of the services -- include several of its brands: Comet, Downy, Febreze, Mr. Clean Magic Eraser, Spic and Span, Swiffer Dusters, and Tide.) P&G also operates a dozen Mr. Clean Car Wash and Oil Change locations (formerly Carnett's Car Washes) in Atlanta.

P&G has built a formidable business partnering with pharmaceutical firms for years, as well, to tap into the industry's lucrative niches. P&G formed a 51%-owned joint venture with leading generic drugs maker Teva Pharmaceutical Industries to sell over-the-counter (OTC) drugs outside North America. P&G and Teva anticipate their alliance will generate up to $4 billion in sales by 2015. In the past, P&G has partnered with Novartis to give Enablex, a Swiss pill used to treat overactive bladder, a deeper and broader reach into the US. It also operates joint venture SPD Swiss Precision Diagnostics with Inverness Medical Innovations to market at-home diagnostic products (including pregnancy tests and fertility monitors under the Clearblue, PERSONA, and Accu-Clear names). Additionally, P&G works with therapeutic drug development firm Curis to research and develop potential hair growth treatments leveraging Curis' Hedgehog agonist technology.

Sales and Marketing

Along with its vast stable of brands, P&G each year invests mightily in advertising its products. In 2014 the company spent $9.2 billion on advertising expenses, up from 2013's $9.7 billion. (Even during the recession, P&G in 2009 shelled out some $7.4 billion for ads.) The company supports its products through advertising, promotions, and other marketing vehicles as it works to build brand awareness. Since the über acquisition of near-equal behemoth Gillette, P&G has seen the marriage of the two giants as offering it increased and sustained bargaining power against the likes of Wal-Mart (which accounted for about 14% of P&G's 2014 sales) in the US and Aldi in Europe, as those two companies delve deeper into private labeling and cost-conscious positioning. The P&G-Gillette entity also flexes more muscle in media spending negotiations.

P&G sells its products worldwide through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, e-commerce and high-frequency stores, and neighborhood stores that serve consumers in developing markets. Meanwhile, the consumer products company continues to strengthen its footprint in other sales channels, such as pharmacies, perfumeries, and e-commerce.

Financial Performance

P&G reported revenue increases between fiscal 2010 and fiscal 2013 followed by a drop of 1% in fiscal 2014 due to divestiture of its Pet Care business and decline in beauty segment net sales in developed markets. This decrease was partially offset by organic growth in health care, fabric care, and home care and baby, feminine and family care segments.

The company reported a 3% increase in net income largely due to sales growth and reduced selling, general, and administrative costs, partially offset by lower gross margins. Net income from discontinued operations declined by $23 million due to lower earnings in Pet Care and prior year product recalls, an unfavorable geographic and product mix, and unfavorable foreign exchange transactions, partially offset by manufacturing cost savings and higher pricing.

P&G's operating cash flow declined by 6% in fiscal 2014, driven by a $1 billion discretionary contribution in a foreign pension plan.

Strategy

Along with P&G's product depth and breadth has come a consistent tweaking of its portfolio in an effort to regularly boost profits and consistently deliver a return to shareholders. The company's latest move on that front is the pending spinoff of Duracell, preferably into a standalone company. P&G also pares down its workforce, when needed, to align with slowing sales and the rising costs of commodities. Through 2014 P&G reduced non-manufacturing enrollment by approximately 9,300, or 15%, hoping to realize $10 billion in savings by mid-2016. The restructuring program plans included a targeted net reduction in non-manufacturing overhead enrollment of approximately 16% - 22% through fiscal 2016.

P&G exited the pet food business in 2014 with the August sale of its Iams, Eukanuba, and Natura brands in North America and Latin America to Mars, Inc. for $2.9 billion in cash. (The sale did not include P&G's pet food business in the European Union, for which it's seeking another buyer.) Mars plans to exercise its option to purchase P&G's remaining pet food business in some parts of Asia Pacific, the Middle East, and Africa.

The company has turned to its highest revenue-generating products for the most growth potential. Even though P&G holds market-leading positions in several product categories, the company has been focusing resources on its roughly 40 best-selling brands. Best sellers are those that generate more than $500 million annually and represent some 85% of sales; brands that fall below this metric are typically sold off. Along with continuing to grow its core brands and categories through innovation, P&G is looking to build its business by catering to unserved and underserved consumers. The consumer products giant is following what it calls a purpose-driven business strategy: more consumers, more parts of the world, more completely. In addition, P&G -- for a sixth consecutive year -- invested about $2 billion in research and development. As part of its strategy, it's also focused on expanding high-margin businesses that are fast-growing and have potential for being global leaders.

In 2014 P&G expanded into the men's hair care category with the introduction of an all-new collection of hair care and styling products. It also introduced Gillette BODY – a line of products that includes the brand’s first razor designed for male body shaving, and QlearQuil, a family of OTC medications for the occasional allergy sufferer.

That year the company also introduced the Tide Professional Coldwater System, an on-premise laundry program that enables facilities to save as much as $8,700 per year based on water, energy, and linen replacement cost savings. In 2014 it opened Tide Dry Cleaners store in Charlotte, North Carolina; Atlanta, Georgia; and Omaha, Nebraska.

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NOXELL CORPORATION


11050 York Rd
Hunt Valley, MD 21030-2098
Phone: 1 (410) 785-7300
Fax: 1 (410) 785-4743
www.pg.com

STATS


  • Employer Type: Public
  • V Pres-admin: Stanley Boric
  • V Pres: Richard G Pease
  • Pres: Marc S Pritchard

Major Office Locations

  • Hunt Valley, MD

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