Corporate Sales: $82 billion
Beauty Sales: $14.8 billion

Key Personnel:

• Jon R. Moeller, President, CEO and Chairman
• R. Alexandra Keith, CEO, Beauty and Executive Sponsor, Corporate Sustainability

Major Products/Brands:

• Art of Shaving
• Aussie
• Farmacy Beauty
• Gillette
• Head & Shoulders
• Herbal Essences
• Ivory
• Maybelline
• Native
• Olay
• Old Spice
• Ouai
• Pantene
• Safeguard,
• Secret
• SK-II
• Snowberry
• Tula
• Venus

New Products:

• Secret Whole Body Deodorant Collection
• Olay Super Serum
• SK-II GenOptics Ultraura Essence New & Improved Formula
• Head & Shoulders Royal Oils
• Pantene Pro-Vitamin Essence
• Daily Repair Mist for Damaged Hair

Comments: In his address to shareholders, regarding 2023 results, Jon Moeller, Chairman of the Board, President, and Chief Executive Officer said P&G met or exceeded its “going-in plans for organic sales growth, core EPS growth, cash generation and cash returned to shareowners in a challenging economic and geopolitical environment.”

In P&G’s Beauty segment, net sales increased 1% to $14.8 billion while organic sales increased 3% versus a year ago. Skin and Personal Care organic sales were unchanged as growth from increased pricing was offset by lower sales of the super-premium SK-II brand, and in Greater China. Hair Care organic sales increased high single digits, driven by higher pricing and favorable product mix due to growth of premium products.

In Q3, Moeller told investors the company had “delivered solid sales and strong earnings growth in the third quarter despite multiple headwinds, enabling us to raise our EPS growth guidance and maintain our top-line outlook for the fiscal year.”

He also said P&G remained committed to its integrated strategy of a focused product portfolio of daily use categories where performance drives brand choice,” however the company posted a surprise drop in Q4 corporate sales, which was attributed to price-conscious consumers eschewing the company’s relatively more expensive toilet paper and diapers.

According to Reuters, P&G’s Q4 bottom line was also affected by weak spending in China where “consumer boycotts of its flagship, pricey Japanese beauty brand SK-II continued to hurt results from the country, P&G’s second-largest market.”

Reuters further reported that volumes in P&G’s beauty business, which includes SK-II, fell 1%. “Executives, however, said the ‘core’ of the business, which includes cheaper shampoos like Head & Shoulders and Pantene, and mainstream skincare brand Olay, is continuing to grow.”

2023-2024 Highlights:

In March of this year, Markus Strobel announced that he would retire from his position of President of P&G’s skin and personal care division, effective August 1. Strobel joined P&G in 1991 and has served in his current position since 2017.

Along with his retirement, P&G promoted Freddy Bharucha and Sue Kyung Lee. Bharucha has been named global president of personal care. Lee has been appointed the global president of P&G skincare.

Bharucha currently serves as P&G’s global president of personal care and beauty operations and Lee serves as president of P&G’s North American personal care and beauty operations. Both Bharucha and Lee assumed their new roles on July 1, 2024.

“Markus has been a powerfully effective leader of our skin and personal care businesses over the last six years, in addition to his previous contributions on brands like SK-II, Braun, and Pantene,” said Alex Keith, CEO of P&G’s beauty division. “His impact on our global skin and personal care businesses is unique, resulting in consistent, strong growth across Olay, Old Spice, Secret, and more.”

In product news, Miracle Rescue with Melting Pro-V Pearls collection and the Pro-V Miracles collection was launched under the Pantene brand umbrella, and the brand also tapped Dara Rene as its latest Healthy Hair ambassador.

P&G’s Olay brand also introduced an Indulgent Moisture body wash collection including five scents in a newly designed 20-oz. bottle.

Corporate Sales: $82 billion
Beauty/Personal Care Sales: $15 billion

P&G’s Major Brands:

• Hair Care: Head & Shoulders, Aussie, Herbal Essences, Pantene
• Skin & Personal Care: Gillette, Ivory, Olay, Old Spice, Safeguard, Secret, Native, Snowberry, SK-II, First Aid Beauty

New Products:

• Pantene Miracle Rescue hair repair line
• Head & Shoulders Bare Limited Ingredient Anti-Dandruff Shampoo

A Look at P&G’s Sales

P&G saw its overall net sales rise 2% to $82 billion thanks in part to a 2% increase in unit volume. Regional volume saw mid-single digit increases in North America and Latin America, and low single digit increases in Asia Pacific and IMEA. Volume in Europe was unchanged and decreased mid-single digits in Greater China.

The company’s beauty net sales increased 2% to $14.7 billion and represented 18% of the company’s net sales and 22% of its net earnings in 2022. While its beauty unit volume was unchanged, higher pricing increased net sales by 3% and foreign exchange had no impact on net sales. Net sales were negatively impacted (1%) by an unfavorable mix due to the disproportionate decline of SK-II sales.

Hair Care net sales increased low single digits. Positive impacts of higher pricing (driven by all regions) and benefit from acquisitions were partially offset by the negative impacts of unfavorable foreign exchange and a decrease in unit volume.

The volume decrease was driven mostly by declines in Europe (due to portfolio reduction in Russia and increased pricing), Greater China (due to market contraction and pandemic-related disruptions) and Asia Pacific (due to increased pricing). Global market share of the hair care category decreased more than half a point.

P&G’s Skin and Personal Care net sales increased low single digits. Positive impacts of a low single-digit increase in volume and increased pricing were partially offset by negative category mix due to the decline of SK-II brand (which has higher than category-average selling prices).

Organic sales increased low single digits. Volume increased mid-teens in Latin America (due to innovation) and increased mid-single digits in North America (due to innovation in personal care and acquisitions) and in Greater China (due to innovation and market growth). Global market share of the skin and personal care category increased half a point.

The company also spent a total of $1.4 billion in 2022 to add Farmacy Beauty, Ouai and TULA to its Beauty unit.

2022-2023 Highlights

In addition to the beauty acquisitions mentioned above, P&G launched a new Olay Regenerist Hyaluronic Peptide 24 collection.

And the new Head & Shoulders BARE line of anti-dandruff shampoos is formulated with just nine ingredients and no silicones, dyes or sulfated surfactants.

The “bare” theme was carried into the product’s recyclable bottle, which is made using a bare minimum of plastic and can be rolled up to not only squeeze out the last drop of product but also reduce packaging waste—and takes up less space in household recycling bins.

See also: Olay’s New Super Serum Changes from Purple to Clear

Looking Ahead

In July, Reuters reported that a P&G executive announced to investors that it would drop its pledge from a corporate policy to not buy wood pulp from degraded forests, drawing anger from “several” P&G investors.

P&G updated its Forest Commodities Policy and removed language that said it would not permit forest degradation, which included activities that impact drinking water, animal habitats or other elements of forests. How the new language would impact P&G’s now tenuous relationship with the EU’s forthcoming deforestation law remains to be seen; however, P&G said it would comply with the law’s requirements.

In April, P&G announced that it would be phasing out Opte, an inkjet wand that enabled targeted makeup application. Opte is no longer fulfilling new product or refill orders and subscription refills ceased in January.

Opte was one of the first brands to emerge from P&G Ventures, a division tasked with identifying innovative products in categories new to the company. Opte was launched in 2019 after more than a decade of development and more than 40 patents

And in July, P&G announced its fourth quarter 2023 net sales were up 5% to $20.6 billion, with full year net sales up 2%. Its fourth quarter 2023 organic beauty unit sales were also up 11% versus a year ago. This comes after the company raised prices 10% earlier in the year following a decline in sales volume that led to drops in revenue and profit.

Corporate Sales: $76 billion
Beauty/Personal Care Sales: $14.4 billion

Major Products/Brands:

• Hair Care—Head & Shoulders, Aussie, Herbal Essences, Pantene
• Skin & Personal Care—Gillette, Ivory, Olay, Old Spice, Safeguard, Secret, Native, Snowberry, SK-II, First Aid Beauty

New Products: Super Nature shampoos and conditioners; Tula Skincare; Ouai hair care; Farmacy Beauty, Aio

Financial Highlights:

Procter & Gamble saw its overall net sales increase 7% to $76.1 billion in 2021. Although the performance was predominantly driven by the company’s health care, fabric and home care segments, a respectable single digit increase in its beauty and grooming portfolios (which accounted for 19% and 9% respectively) also helped boost results.

Overall beauty net sales climbed 8% to $14.4 billion on a 3% increase in unit volume. Specifically, P&G’s hair care net sales increased mid-single digits due to a low single digit increase in volume and increased pricing. Skin and personal care sales increased high single digits due to a low-single digit volume increase, favorable mix due to the disproportionate growth of the super-premium SK-II brand, increased pricing and favorable foreign exchange rate. Volume increased double digits in Greater China and increased low single digits in North America driven by increased consumption of personal care products due to the pandemic. This volume growth was partially offset by a double-digit decline in India, Middle East and Australia (IMEA) and a low-single digit decline in Asia Pacific due to pandemic-related market contractions. Global market share of the skin and personal care category fell nearly half a point.

2021-2022 Highlights:

In 2021 the brand added to its venerable Olay product line with the launch of the Olay Body Lotion Collection, a 3-product line formulated with prestige skincare ingredients like collagen, hyaluronic acid and Vitamin C. In other Olay news, P&G also introduced a limited edition, easy-open, winged lid for improved grip on jars of Olay’s most popular products like Regenerist Micro-Sculpting Cream, Vitamin C + Peptide 24 Face Moisturizer, Retinol 24 Face Moisturizer and Collagen Peptide 24 Face Moisturizer. The caps also feature Braille text and have labels printed in high contrast. The lids are offered free with product purchase on the brand’s website.

The new lotions are just one in a flurry of moves and acquisitions P&G has made to broaden its beauty presence. In fiscal 2022, the company added Tula Skincare, Ouai haircare and Farmacy Beauty to its brand portfolio, which already includes SK-II and First Aid Beauty.

“Our portfolio is small but powerful. Farmacy is a unique addition, appealing to the Gen Z consumer as a conscious brand and strengthening our presence in the specialty beauty channel,” commented R. Alex Keith, CEO, P&G Beauty. “This combination is super attractive and fills a space in our portfolio that we don’t have.”

In November 2021, P&G announced it would roll out five Herbal Essences collections with packaging made from Eastman Renew resins. The bio:renew sulfate-free collections have been commercialized with standardized How2Recycle labels for clear recycling instructions. (Eastman Renew molecular-recycled plastic, which comprises 50% certified recycled plastic, is said to reduce the use of virgin plastic from non-renewable resources.)

In December 2021, P&G and A.S. Watson Group collaborated to launch a new Japanese skincare brand called “aio” in the physical and online stores of Watsons in the Greater China markets. Aio is aimed to attract Gen Z & Millennials and have a larger proportion of sales from online channels. Aio is designed with fully recyclable packaging.

Markus Strobel, global president, P&G Skin & Personal Care, said, “This is a P&G Beauty first breakthrough collaboration with a retail partner to co-create a new skincare brand from scratch… This is the future of retailing and skincare.”

P&G also debuted a Costco-exclusive shampoo and conditioner called Super Nature targeted to “clean beauty” consumers. The formulas’ marquis ingredient is sustainable also and the bottles are made with recycled materials and manufactured in a zero-waste landfill facility.

Corporate Sales: $71 billion
Beauty Sales: $13 billion

Major Products: Hair Care (Conditioner, Shampoo, Styling Aids, Treatments) including Head & Shoulders, Herbal Essences, Pantene, Rejoice; and Skin & Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Care) including Olay, Old Spice, Safeguard, Secret, SK-II

New Products: Olay Cleansing & Renewing Body Care Duo with Retinol, Olay Premium Exfoliating Body Wash Collection, Olay collagen Peptide 24 Serum, Head & Shoulders Clinical, Royal Oils and Supreme, Pantene Radiant Color Shine Shampoo

Comments: With its wide-ranging CPG product line, P&G was one of the exception-to-the rules companies in 2021, balancing Covid-19 necessities like toilet paper and cleaning products, with deodorant, skin care and shampoo basics—and ramping up annual sales. For the year ended 7-30-21, the U.S.-based behemoth reported fiscal year 2021 corporate net sales of $76.1 billion, an increase of 7% over the prior year. Beauty Sales accounted for  $13.4 billion, about 19% of the total, an increase of 4% over the previous year. Fourth quarter net sales reached $18.9 billion, up 7% over the prior year. Net sales were tipped slightly toward International (39.7%); U.S., 31.3%).

P&G’s largest customer, Walmart Inc. and its affiliates, accounted for consolidated net sales of approximately 15% in 2020, as in 2019 and 2018. No other customer represents more than 10% of the company’s consolidated net sales.

David Taylor, chairman, president and CEO at the time the annual results were released, said, “We delivered another year of strong results with balanced top and bottom-line growth and strong cash generation, exceeding each of our in-going targets. We built strong momentum prior to the pandemic and have strengthened our position further.” (In his final fiscal year at the helm, Taylor reportedly upped his annual salary by a million dollars to $23.9 million).

P&G Beauty has been restructured and now encompasses two categories: Skin & Personal Care; and Hair Care. Skin and Personal Care organic sales increased double digits, primarily driven by innovation, increased pricing and positive mix impact from the disproportionate growth of SK-II brand due to the pandemic-related travel disruptions in the base period.

Hair Care organic sales increased low single digits primarily due to increased pricing, partially offset by negative mix from growth in emerging markets. Higher current year volumes in certain markets due to pandemic related shutdowns in the base period were offset by lower volumes in North America due to the impact of pandemic-related inventory restocking in the base period.

The company touts top positions in both Skin & Personal Care and Hair Care. The Olay brand, one of the top facial skin care brands in the world has approximately 6% global market share, while Pantene and Head & Shoulders brands boost their retail hair care market to over 20% global market share In fiscal 2020, Beauty net sales increased 4% to $13.4 billion on a 3% increase in unit volume. Unfavorable foreign exchange impacts reduced net sales by 2%. Higher pricing increased net sales by 2%. Favorable product mix added 1% to net sales due to the disproportionate growth of the Skin and Personal Care category, including the Olay skin care brand, which has higher than segment average selling prices. Global market share of the Beauty segment increased 0.2 points. Volume increased mid-single digits in North America, Europe and Asia Pacific and increased low single digits in Greater China and Latin America. Volume decreased high single digits in IMEA.

Volume in Hair Care increased low single digits—mid-single digits in Europe and Asia Pacific and low single digits in North America and Latin America due to product innovation and market growth. Volume decreased double digits in IMEA and decreased low single digits in Greater China due to the economic slowdown caused by the pandemic in the second half of the fiscal year and market declines in certain countries. Global market share of the hair care category was unchanged.

Volume in Skin and Personal Care increased mid-single digits. Volume increased double digits in Greater China, imid-single digits in North America, and ilow single digits in Europe and Asia Pacific due to premium innovation, increased marketing spending and market growth, partially offset by a volume decrease in the SK-II brand and a mid-single digits decline in IMEA due to pandemic-related travel restrictions. Global market share of the skin and personal care category increased nearly half a point.

In October, P&G Beauty announced its first-ever refillable aluminum bottle system to launch at-scale, with its Head & Shoulders, Pantene, Herbal Essences and Aussie brands in Europe. The refill system uses a new reusable 100% aluminum bottle and recyclable refill pouch, made using 60% less plastic (per ml versus standard brand bottle). The new sustainable packaging will enable millions of households across Europe to reduce, reuse and recycle. It is set to pave the way in changing the way consumers buy, use and dispose of their shampoo bottles.

P&G Beauty says it is on track to reduce virgin plastic usage by 50% in shampoo and conditioner bottles by the end of 2021, where through collective efforts to reduce, reuse and recycle it will result in 300 million fewer virgin plastic bottles being produced yearly.

2021 Highlights

In June, P&G opened a new Global Product Supply Innovation Center (PSIC) in Kronberg, Germany—and says it represents the ‘sustainable supply chain of the future.’ PSIC leverages P&G innovation and serves as the hub for the collaboration with a network of local suppliers, tech companies, R&D institutions and top universities—developing solutions that are scalable, globally. It also plans to “decarbonize” its supply chain.

By 2030, the company targets to cut its greenhouse gas emissions by 50% across operations. P&G has committed to purchase 100% renewable electricity globally and to achieve overall carbon neutrality for the decade from 2020-2030.

At the end of July, P&G announced that Jon R. Moeller, vice chairman and chief operating officer, would succeed David Taylor as Procter & Gamble’s president and chief executive officer, effective November 1, 2021. Moeller joined P&G in 1988. Former chairman, president and CEO David Taylor becomes executive chairman.

Debuting in what the brand calls ‘cosmic’ packaging, P&G launched Quiet and Roar, a ‘clean’ gender-neutral line of five body wash and body lotions with essential oil scents, aimed at Gen Z—and designed to restore mind and body. The brand uses 100% post-consumer recycled materials to package the body lotions and body washes.

Continuing to appeal to this demographic, the global powerhouse recently launched Nou, a multicultural hair care line aimed at Gen Z.

Looking Ahead

David Taylor, chairman, president and CEO (at the time of the year’s 2020 results), said, “As we look forward to fiscal 2022, we expect to continue to grow top-line and bottom-line and to deliver another year of strong cash return to shareholders despite a challenging cost and operating environment.”

P&G expects fiscal year 2022 all-in sales growth in the range of 2-4% versus the prior fiscal year. The company expects organic sales growth also in the range of 2-4%.

Taylor added: “Looking ahead, we believe that the volatility and challenges we face may continue for some time. While parts of the world have returned to some sense of normality, there are many parts still well in the midst of the pandemic. There also may be a resurgence of the virus in many places now thought of as generally safe. And, the economic impact has yet to be fully realized. Over the long term, we believe we are well-positioned to serve consumers and create value in an attractive industry. While we are not immune to recession, our strategy puts us on better footing than prior downturns to weather economic headwinds.”

Corporate Sales: $67.7 billion
Beauty Sales: $12.9 billion

Major Products:

• Head & Shoulders
• Herbal Essences
• Pantene
• Rejoice
• Olay
• Old Spice
• Safeguard
• SK-II
• Secret
• Billie

New Products:

• Olay Premium Body Wash with Collagen
• Nutrient Blends collection
• Herbal Essences bio:renew collection
• SK-II Pitera Treatment Essence
• Aussie Total Miracle and Miracle Moist conditioners and sprays
• Secret Essential Oils deodorant

Comments: With several of the world’s leading Beauty brands—Olay, Pantene and Head & Shoulders—as well as an array of necessities such as deodorants and cleaning products, diversification paid off big for Procter & Gamble, whose stock hit an all-time high in 2020.

During the pandemic, the company had one of their best years ever, reporting fiscal year 2020 net sales (ended June 30, 2020) of $71 billion, an increase of 5% over the prior year. Everyday staples and trusted brands helped to easily propel the global manufacturer through the first six months of Covid, as orders for items such as shampoo, detergents and cleaners soared. Net sales increased 1% to $67.7 billion on a 3% increase in unit volume.

According to David S. Taylor, chairman of the board, president and chief executive officer, “We expect to grow through this crisis and come out even stronger on the other side,” Taylor stated in the company’s annual report. “We delivered strong, balanced sales and profit results in fiscal 2020, both pre-Covid and through the balance of the year, meeting or exceeding each of our going-in targets, demonstrating the commitment and agility of P&G people and the robustness of our strategy.”

In 2019, P&G reorganized its global business units into five categories, with Beauty now a standalone. It includes Hair Care (Conditioner, Shampoo, Styling Aids, Treatments); Skin and Personal Care (Antiperspirant and Deodorant, Personal Cleansing, Skin Care).

Beauty sales were up 4% over the prior year, recording $12.9 billion, with the Skin & Personal Care category growing in mid-teen digits. Hair Care and Skin & Personal Care accounted for 19% of net sales. In Hair Care, volume increased low single digits. Volume in Skin and Personal Care increased high single digits. P&G said the category experienced “disproportionate growth” including the super-premium SK-II and premium Olay Skin brands which have higher than segment average selling prices.”

P&G’s Olay brand is feted as one of the top facial skin care brands in the world with nearly 6% global market share. P&G also claims to be the global market leader in the retail hair care market with over 20% global market share, primarily behind their Pantene and Head & Shoulders brands.

Packaging—the whole package—is an important criterion at P&G. The global powerhouse says their holistic strategy starts “with noticeable superiority across all elements of our consumer proposition—products, packaging, brand communication, retail execution (in-store and online), and consumer and customer value. It takes into account that consumers don’t focus on one element of a brand only. Consumers interact with the whole brand—the product, package, what we say and how they feel about the brand, how they experience it in the store or online and whether it truly creates value over alternatives.”

Take Olay Cellscience for example. P&G says Olay Cellscience’s super-peptide formula and prestige-inspired packaging was specifically designed for China’s discerning beauty consumers. This consumer-led innovation helped Olay deliver two consecutive years of strong double-digit organic sales growth in China.

2020 Highlights

In January, P&G acquired women’s D2C Beauty & Grooming Co. Billie—a subscription-based, direct-to-consumer female body care company focused on women’s shaving supplies and premium body care products. Their current product portfolio includes razors, shaving cream, body wash and body lotion.

P&G continues to innovate on the sustainability front. By 2030, P&G Beauty’s brands have committed to using 100% recyclable or reusable packaging while reducing the use of virgin petroleum plastic by 50%. On April 20, 2020, in celebration of the 50th Anniversary of Earth Week, P&G Beauty announced that Old Spice and Secret are the first major brands to introduce all-paper, plastic-free deodorant packaging. The two brands tested “the first all-paper tube package” for select Old Spice and Secret aluminum-free deodorants in May at 500 Walmart stores in the U.S.

The paper tube package, made of 90% recycled paper, is certified by the Forest Stewardship Council and features a “push up” design that would replace some of P&G’s plastic stick deodorant cannisters. P&G, which is completing the second phase of recyclability testing on the new package this fall, hopes to learn how consumers respond to the design. If successful, P&G will expand the new package across more of its line-up.” The manufacturer has also trialed refillable packaging for Olay.

Net sales in the fourth quarter of fiscal year 2020 (ended June) were $17.7 billion, an increase of 4% versus the prior year. Beauty segment net sales remained flat versus a year ago. Skin and Personal Care organic sales decreased low single digits primarily driven by negative product mix due to double digit decline of the super-premium SK-II brand driven by pandemic-related travel disruptions. This was partially offset by increased volume in Personal Cleansing. Hair Care organic sales increased high single digits driven by strong innovation and retail execution in North America and China, increased pricing due in part to a reduction in promotional activity and retailer inventory restocking.

Looking Ahead

The company expects fiscal 2021 all-in sales growth in the range of 1-3% versus the prior fiscal year. This includes an estimated 1% negative impact from foreign exchange. The company is targeting organic sales growth in the range of 2-4%.

Corporate Sales: $66.8 billion
Beauty Sales: $12.4 billion

Major Products/Brands:
Hair Care, Skincare and Personal Care, including:

• Head & Shoulders, Aussie
• Herbal Essences, Pantene
• Gillette, Ivory
• Olay, Old Spice
• Safeguard, Secret
• Native, Snowberry, SK-II

New Products:

• Pantene Rose Water Collection
• Pantene Pro-V Intense Rescue Shots
• Safeguard Pure White with Germshield+
• Gillette Pure shave cream and gel

Comments: Procter & Gamble continues to rank as one of the most profitable personal care companies based in the United States. After a fiscal tumble in 2016, in 2018 the company posted a respectable 3% gain in net sales, with a 1% increase in both organic sales and unit volume.

P&G 2018 net sales were led by its Beauty (19%), Grooming (10%) and Health Care (12%) divisions, with the most solid sales footing in the North American region (44%), followed by Europe (24%) and Asia Pacific (9%).

Segment-wise, Beauty net sales increased 9% to $12.4 billion in 2018. Although global market share of P&G’s Beauty segment decreased 0.2 points, organic sales increased 7% on a 2% increase in organic volume, and unit volumes increased 2% thanks to top-selling Olay premium and super-premium SK-II skincare brands.

Hair Care net sales increased 5% to $7.9 billion in 2018, though volume increased low single digits, due to competition in developed regions and improved product innovation and in-store executions in developing regions decreased low single digits mainly due to competitive activity. The company’s global market share of the Hair Care category decreased less than half a point.

Volume in P&Gs’ Skincare and Personal Care segment increased low single digits, with product innovation driving low single digit growth in developed market volume.

Grooming net sales, headed by the Gillette franchise, decreased 1% to $6.6 billion in 2018 despite unchanged unit volume. P&G’s grooming portfolio was boosted with the addition of Walker & Company, a brand that specializes in health and beauty for people of color, and Form Beauty, a premium hair care collection for women with textured hair. Walker & Company Brands will operate as a separate and wholly-owned subsidiary of P&G, continuing to be led by CEO and founder Tristan Walker.

Innovation-wise, P&G invented a plastics recycling technology that separates color, odor and other contaminants from recycled polypropylene plastic to purify it into nearly new quality resin. The process is being scaled up with PureCycle Technologies to help unlock the potential for billions of pounds of high-quality recycled plastic to replace virgin materials for P&G and other companies.

News of Note in 2019

At the 2019 Sustainable Brands Conference in Detroit, Olay executives announced they would be test piloting a new way to reduce the amount of plastic used in the beauty category by offering Olay Regenerist Whip moisturizer in select U.S. and UK online retailers with a recyclable, polypropylene refill pod. The concept is one step in the brand’s commitment to making more of their packages recyclable or reusable, as part of P&G’s larger sustainability initiatives.

In the same eco vein, P&G was the first CPG company to respond to TerraCycle’s Loop concept, which helps leading brands redesign packaging and supply chain processes. Eight P&G brands including Pantene and Crest are being used as test brands to help validate and optimize P&G’s collect-clean-refill business model.

Looking Ahead

In March, P&G invested $8.8 million in three new businesses to be created, incubated, scaled and headquartered in Singapore. The investment included a seed fund of nearly $5.9 million through GrowthWorks, an “intrapreneurship” and venture-building unit within P&G Singapore, a move that would help the company innovate faster for its Asian consumers. The Singapore Innovation Center is responsible for critical research and development across brands such as Pantene, Head & Shoulders, SK-II and Olay.

On the personnel front, this July P&G began implementing a simplified management structure designed to “increase focus, agility and accountability,” while also shifting about 60% of corporate work to the business units and markets.

Corporate Sales: $66.8 billion
Beauty Sales: $12.4 billion (FY 2017 Beauty Sales: $11.8 billion)

Major Products/Brands:

• Aussie, Gillette shaving products, Head & Shoulders
• Herbal Essences, Vidal Sassoon, Rejoice hair care
• Ivory, Olay, Old Spice, Pantene, Rejoice, Safeguard
• Secret, Crest, Fixodent, SK-II, Oral-B,
• Scope and Art of Shaving

New Products:

• Pantene Smooth & Sleek
• Olay Whips and Olay Minis skin care products
• Herbal Essences Bio Renew
• Old Spice Red Collection scents
• Snowberry skin care

P&G Markets 65 brands In 10 Categories

P&G has been simultaneously adding value and tightening its belt to fortify its bottom line for long-term growth. Brand-wise, the company eliminated and/or consolidated over 100 non-core brands, slimming its category representation from 16 to 10 in 2016.

By focusing on 65 brands in 10 categories, P&G’s net income rose slightly last year to nearly $10.2 billion, with net sales driven by North America (44%), Europe (24%), Asia Pacific and Greater China (both 9%), and Latin America and India/Middle East/Africa (both 7%). Beauty and grooming represented 19% and 10% of total net sales, respectively, with Beauty net sales increasing 9%, thanks to single-digit increases in hair care, skin and personal care volumes.

After successfully trimming $10 billion from fiscal 2012 through 2016, P&G is working to save an additional $10 billion through 2021 by shrinking the reducing raw and packaging material costs, manufacturing expenses, transportation and warehousing. The company also continues to optimize the money it spends on marketing by ratcheting down on media costs related to agency fees and advertising production costs while heightening efficiencies associated with in-store materials and sampling programs.

That’s not all. P&G eliminated 2,720 jobs in 2017, this after cutting 2,120 jobs in 2016. The company also announced it was restructuring the compensation for some of its top executives, including CFO Jon Moeller, who saw his salary increase 5.3% when he was named vice chairman, but his bonus this fiscal year was reduced by 23.5%. CEO David Taylor’s base salary remained constant, but his total compensation fell about 4% overall.

Amidst the cuts, there were some strategic additions. In March, P&G acquired New Zealand-based Snowberry, which markets a carboNZero-certified range of anti-aging skincare products.

In April, P&G also acquired the consumer health business of Merck KGaA for about $4.2 billion, which P&G said would help expand its “consumer health care business by adding a fast-growing portfolio of differentiated, physician-supported brands across a broad geographic footprint” as well as providing P&G “with strong health care commercial and supply capabilities, deep technical mastery and proven consumer health care leadership that will complement P&G’s existing consumer health care capabilities and brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B.”

And in May, the company implemented a new SmartLabel initiative designed to improve brand transparency. Over 3,500 P&G products across the company’s brand portfolio now feature the interactive label, which enables consumers to access detailed information such as product ingredients, usage instructions, certifications and endorsements using online and mobile platforms.

News of Note in 2018

P&G announced a 3% increase in net sales ($16.5 billion) versus last year when it released its fourth quarter results in July. The growth was driven by a 7% increase in organic sales in the company’s beauty segment and double digit increases in skin and personal care organic sales. Organic sales in the grooming segment dipped 3%.

Looking Ahead

In April, P&G announced the launch of Ambition 2030, a package of broad, forward-looking goals that aimed to “enable and inspire positive impact on the environment and society while creating value for the company and consumers.” Among the targets are inspiring responsible consumption through the use of 100% recyclable/reusable packaging and launching “more sustainable innovations.”

Corporate Sales: $71.9 billion
Beauty: $11.8 billion (Beauty and Baby Care)

Major Products/Brands: Aussie, Gillette, Head & Shoulders, Herbal Essences, Ivory, Olay, Old Spice, Pantene, Rejoice, Safeguard, Secret, Crest, Fixodent, SK-II, Oral-B, Scope, Art of Shaving.

New Products: Duo (Olay, Ivory and Old Spice), Old Spice Hydro Wash, Pantene Foam Conditioner, Head & Shoulders 2 in 1 Classic Clean, Art of Shaving fragrance collection.

Comments: In fiscal 2017, Procter & Gamble streamlined its product portfolio by divesting, discontinuing and consolidating around 100 “non-strategic” brands, which included four product categories spanning 43 haircare, hair styling, color cosmetics and fine fragrance lines under its beauty brand umbrella. The goal of the restructuring, coupled with newly honed marketing and advertising objectives and expenditures (cut by 50%) was to create leaner, more focused support for the company’s remaining 65 brands across 10 key categories.

Three-quarters of the way through fiscal 2017, the company saw its corporate sales fall less than 1% to just under $49 billion, with beauty sales declining 1% to $8.6 billion. Skin and personal care gains helped buoy beauty sales. One noteworthy development was the growth of Procter & Gamble’s super premium SK-II brand, which delivered consistent double-digit growth, and helped offset lower volume in its retail skincare numbers. Organic hair care sales were flat.

In an effort to jump start innovation, the company debuted DUO, a dual-sided body cleansing buffer that brings together the clean of a traditional bar soap with a skin softening body wash in one convenient package. The specially designed cleansing implement also highlights the duality, boasting one side with exfoliating microscrubbers and a soft, plush flip side. The product was born out of consumer research indicating that 34% of men and 44% of women tend to cleanse with both a bar soap and a body wash in the shower. The product iteration spans many of Procter & Gamble’s most popular brands including Olay, Old Spice and Ivory.

News of Note in 2017: P&G continues to adapt in areas it believes are most important to consumers. In a nod to increased consumer preference for product transparency, the company announced plans to pull back the proverbial curtain and disclose the ingredients for all of its fragrance products in the U.S. and Canada by 2019. The ingredients will be available for public viewing online and the initiative was said to be another step in the company’s “sustainability journey toward enabling consumers to make informed choices.”

The company is also making strides toward its overall goal for improved sustainability to “better serve the increasingly environmentally concerned shopper.” To date, Procter & Gamble has qualified 73% of its plants as sending zero manufacturing waste to landfill, completed the final stages of wind and biomass projects that will nearly double their use of renewable energy once they are fully online, and announced their first recyclable shampoo bottle—Head & Shoulders—which is made with reclaimed 25% “beach plastic.”

Looking Ahead: In his remarks to shareholders, CEO Taylor expressed that Procter & Gamble is on track to be where the company projected it would be in fiscal 2018.

“We’re making sequential progress, and we’re raising the bar in everything we do,” he said. “We’re accelerating efforts to execute and deliver on the plans we’ve put into action.”

Progress, he said, will be measured in years, not quarters, promising that the company’s commitment to investing in innovation and brand building is architected to shore up P & G’s positioning “for the next three years, five years, and into the future,” with a continued consecutive acceleration of organic sales growth expectation of 2% to 3%, core earnings per share growth of 5% to 7%, and 90% or better free cash flow productivity. That said, company executives project the ongoing tweaks to the company’s supply chain (reducing manufacturing expenses, transportation and warehousing, and raw and pack materials) from 2017 through 2022 could amount to a savings in the neighborhood of $10 billion.

Corporate Sales: $76 billion
Beauty Sales: $18 billion

Major Products/Brands: Beauty, Hair and Personal Care products including Head & Shoulders, Nioxin, Pantene, Herbal Essences, Old Spice, Sebastian, Rejoice, Vidal Sassoon, Aussie, DDF, Olay and SK-II.

New Products: SK-II Mid-Day Miracle Essence, SK-II Mid-Night Miracle Essence, Head & Shoulders Instant Relief Collection (U.S), Olay Regenerist Micro-Sculpting Cream with SPF 30, Olay Regenerist Luminous Light Hydrating Lotion,

Comments: P&G shook up the beauty industry with its announcement that it would be majorly downsizing, selling off a majority of its cosmetic brands to Coty, in efforts to become more focused and profitable, and increase productivity. With the transaction newly finalized this quarter, P&G Beauty remains focused on the Skin Care, Personal Care, and Hair Care categories and aims to continue to be a beauty industry leader with the No.1 or No. 2 brands globally in each category, including Olay, SK-II, Head & Shoulders, Pantene, Rejoice, Vidal Sassoon, Herbal Essences, Aussie, Old Spice, Safeguard and Secret. (Sales figures and information in this report reflect cosmetics and color products that were still under P&G’s Beauty umbrella in 2015.)

The transaction with Coty includes P&G’s global salon professional hair care and color, retail hair color, cosmetics and fine fragrance categories, along with select hair styling brands, all of which have historically been part of the company’s Beauty, Hair and Personal Care reportable segment and had net sales of $5.5 billion in fiscal year 2015.

On November 1, 2015, David Taylor succeeded A.G. Lafley (in his second term) as P&G’s CEO.

Finishing out 2015, P&G’s Corporate sales reached $76 billion, a decline of about 5% from $80.5 billion posted for 2014. Beauty (Beauty, Hair, Personal Care) accounted for about one-quarter of this total, coming in at $18 billion, down about 7% from the previous year. Billion dollar brands include Head & Shoulders, Olay, Pantene, SK-II and Wella.

For the year, increased pricing led to a benefit of 2%. Volume decreased low single digits in developed markets and was down mid-single digits in developing markets. All categories experienced decreased volume, in many cases due to stiff and growing competition.

Organic sales were up in Skin and Personal Care thanks to growth of the premium SK-II skin care brand, which partially offset lower sales of Olay.

SK-II introduced two new essentials: SK-II Mid-Day Miracle Essence and SK-II Mid-Night Miracle Essence.

Olay reportedly generates about $2.5 billion in annual sales and represents an 8% share of the global facial skin care market, even though its U.S. sales have declined each year since 2010. A plan to refocus on the brand’s core and redefine its marketing strategy are in the works in attempts to boost sales.

Head & Shoulders, P&G’s largest shampoo brand, which it touts as the No. 1 shampoo brand globally, has grown organic sales for the past 20 years. In 2015, the brand launched the Instant Relief Collection in the U.S., designed to provide cooling scalp relief with the first wash.

Looking Ahead

Taylor was optimistic about the company’s future. “Looking forward,” he said, “we’re committed to continued productivity improvement and cost savings that provide the fuel for innovation and investments needed to accelerate and sustain faster top-line growth. We expect fiscal 2017 to mark another significant step toward our goal of balanced growth and value creation and total shareholder return in the top third of our competitive peer group.”

P&G estimates sales growth of about 1% for fiscal 2017.

Corporate Sales: $76.3 billion
Beauty Sales: $18.1 billion (beauty, hair & personal care)

Major Products/Brands: Head & Shoulders, Olay, SK-II, Cover Girl, Nioxin, Pantene, Herbal Essences, Pert, Sebastian, Vidal Sassoon, Aussie, DDF, Nice ’n Easy, Dolce & Gabanna, 007, Hugo Boss, Lacoste, Puma, Dunhill, Escada, Dulce & Gabbana, Fekkai, Gucci Crest, Scope, Ivory, Old Spice, Safeguard.

New Products: CoverGirl Star Wars Collection, Head & Shoulders Full & Thick Advanced Thickening Tonic for Men, Olay {Out Of This Swirled!} Deep Pore Clean Plus Exfoliating Scrub, Essence of Honeysuckle + White Tea, Herbal Essences Wild Naturals Rejuvenating Body Wash, Vidal Sassoon Pro Series, Gillette Odor Shield Body Wash, Crest Pro-Health.

Comments: The heat is on at P&G, where a long talked about turnaround strategy has now been set in motion. But did it come too late? Or just in time?

Procter & Gamble reported a $7 billion profit for its 2015 fiscal year ended June 30, which was an alarming 40% plummet from the year before. Corporate sales decreased 5% to $76.3 billion.

The company attributed poor results mostly to weakened foreign currencies, which reduced total sales by 6%. In addition, the company experienced troubled sales in China, and took a $2.1 billion charge as it changed its accounting method for Venezuelan operations.

Organic sales for the Beauty, Hair and Personal Care segment declined 1%, as increased pricing only partially offset lower volume. Innovation-driven sales growth in Cosmetics and Salon Professional categories was offset by a sales decline in Skin and Personal Care due to competition and decreased sales in Prestige due to lower levels of innovation. Hair Care organic sales were unchanged as modest growth from pricing in developing markets was offset by lower volume in developing regions due to competition.

Beauty, Hair and Personal Care sales topped out at $18.1 billion, a 7% drop from last year.

The buzz throughout the year centered on Lafley’s targeted plan of selling off about 80 to 90 of the company’s 120 brands, keeping only the top performers. Rumors finally came to an end in June when P&G announced a huge merger deal with Coty.
Following an earlier sale to Unilever of Camay and Zest brands—the first time P&G transferred brands to a competitor—the consumer products giant made a large divestiture leap, accepting Coty’s offer of $12.5 billion for 43 brands, from hair care to cosmetics. The transaction includes P&G’s global salon professional hair care and color, retail hair color, cosmetics and fine fragrance businesses, along with select hair styling brands. (See Coty, at No. 12 on our list for a rundown on brands included in the deal.)

Following the transaction, which is expected to close in the second half of 2016, P&G shareholders will own 52% of all outstanding shares on a fully diluted basis (inclusive of all outstanding equity grants), while Coty’s existing shareholders will own 48% percent of the combined company.

P&G Beauty will remain focused on the Skin Care, Personal Care, and Hair Care categories and aims to continue to be a beauty industry leader with the No.1 or No. 2 brands globally in each category, including Olay, SK-II, Head & Shoulders, Pantene, Rejoice, Vidal Sassoon, Herbal Essences, Aussie, Old Spice, Safeguard and Secret.

While Lafley, in his second tenure at P&G’s helm, laid the groundwork for the selloff, this November he will hand the corporate reins to incoming president and CEO David Taylor, the company’s 14th CEO, who will be tasked with fixing the company’s flagging beauty business. Lafley will remain on the board of directors as executive chairman to smooth the leadership transition.

News of Note

In February, P&G announced plans to build a $500 million manufacturing plant in West Virginia, which will be only its second new site in the U.S. since 1971. The plant, set to open in 2017, will encompass more than 1 million square feet and employ 700 full-time workers. P&G says the facility will be able to supply products to 80% of the East Coast within one day, but is yet to disclose which brands will be manufactured at the new location.

In May, P&G announced one of its initial beauty divestments, returning the Frédéric Fekkai brand back to Fekkai Brands. P&G purchased the brand in 2008 when it expanded its reach into luxury hair care.

Toward the end of 2014, P&G released expanded sustainability goals, including a desire to double the company’s use of recycled resin in plastic packaging. The report covered 12 established environmental sustainability goals including the use of 100% recycled or renewable materials for all products and packaging.

According to P&G’s sustainability report, “While there are practical limits on how far packaging can be reduced, our continued focus on design optimization makes us confident that we will achieve our goal of reducing packaging by 20% per consumer use by 2020.” Since 2010, the company says it has shrunk packaging by 4.5% per consumer use.

Based on confidence that the 2020 goal will be reached, the company said it was eyeing the goal of doubling the use of recycled resin in plastic packaging. P&G also said it wants to ensure that 90% of its packaging is “recyclable or that programs are in place to create the ability to recycle it.”

Looking Ahead

P&G said that its guidance for fiscal year 2016 is relative to fiscal 2015 results “after estimated restatements to report the earnings from the Beauty categories it plans to exit as discontinued operations.”

Corporate Sales: $84.2 billion
Beauty Sales: $20 billion

Major Products: Cover Girl, Max Factor, Olay, Old Spice, Safeguard, Secret, Head & Shoulders, Herbal Essences, Nice’ n Easy, Pantene, Rejoice, Lacoste, Pert, Sebastian, Gucci, Hugo Boss, SK-II, Wella, Head & Shoulders, Olay, Pantene, SK-II, Wella.

New Products: Cover Girl Outlast Stay Brilliant, Clairol 5in1, Pantene Pro-V Anti-Oxidant Technology, Vidal Sassoon Pro Series ColorFinity Collection, Gillette Body, Old Spice grooming collection, Dolce & Gabbana Dolce, Old Spice Re-fresh body sprays; Pantene Expert Collection Age Defy Advanced Thickening Treatment.

Comments: In a year marked by corporate leadership change, uncertain global economic conditions and fierce market competition, Procter & Gamble’s overall sales rose 1% in fiscal 2014 (down from 3% in the previous year), but still reaching a record $84.2 billion.

Beauty, the consumer goods manufacturer’s second largest unit, accounted for about 24% of net sales, but earnings for the year were down 2% from the previous year. Volume grew low single digits. “Beauty segment organic sales were flat with gains from market growth and product and commercial innovation in hair care, deodorants, and personal cleansing offset by sales decreases in salon professional and skincare from competitive activity and market contraction,” according to the company.

Making Adjustments

When A.G. Lafley took back the reins of P&G last year, he readjusted the company’s business units once more to focus on and improve key industry areas. Global Beauty now encompasses Beauty Care (Antiperspirants and Deodorants, Cosmetics, Personal Cleansing and Skin-care); Hair Care & Color; Prestige (fragrances and prestige skincare); and Salon Professional.

With five billion- dollar brands in the Beauty unit—Head & Shoulders, Olay, Pantene, SK-II and Wella—P&G says that Olay is the top facial skincare brand in the world with approximately 10% global market share. In hair care and color, P&G claims a 20% global market share thanks to Pantene and Head & Shoulders. In the prestige channel, the company’s leading contenders are prestige fragrances and the SK-II brand.

Dolce & Gabbana, Gucci and Hugo Boss prestige fragrance brands top the global market.

In the 2013 annual report, Lafley acknowledged that much progress had been made as far as rebuilding the sluggish sales, but there was more to be done. Similar to the case with other of our Top 20 companies, he said, “We are focusing our resources on our leading, most profitable products, categories and markets.” He said they would also zero in on core markets, such as the U.S., as well as investing in the most promising categories and countries. The consumer products giant also initiated—and kept at the forefront—a number of comprehensive cost-saving steps covering areas including cost of goods sold, marketing expenses and overhead.


One thing P&G says it has not cut back on is innovation, which it calls its ”lifeblood.”

Targeting Beauty Sales

Despite the lag in 2013 sales, Lafley remains positive, saying, “I’m as confident as ever that P&G has what’s needed to win—with consumers, customers and shareholders.”

At the end of January, following the company’s lackluster second quarter, Beauty proved to be the weakest of

P&G’s business segments, as category sales had declined 2.2%, to $5.28 billion from $5.4 billion. Skincare sales were hurt most.


Even in the highly competitive hair care business, P&G said there had been pockets of strength, such as double-digit growth in Europe, the Middle East and Africa for the Head & Shoulders brand.

Pantene was credited as the “biggest opportunity” in hair care, and high hopes were placed on its new Old Spice brand hair care products.

Further betting on the men’s market, P&G attempted to stretch the value of its billion-dollar Gillette brand with the launch of a new line of male grooming products called Gillette Body.

Two additional new product ranges for women also emerged: Pantene Pro-V Anti-Oxidant Technology, Pantene’s first clinically tested solution to oxidative damage, and Vidal Sassoon Pro Series ColorFinity Collection, which is said to lock in long-lasting color.

To boost Olay’s skincare story and to highlight the line’s new reformulation, Olay Regenerist partnered with Dr. Omar Torres, a renowned dermatologist and author.

In July, P&G announced a new hair care product, just launched in the UK, which it said aims to “revolutionize the hair care market.” Clairol 5in1, billed as “the multi-benefit family-tailored solution,” offers five key hair care benefits including cleansing, softening, nourishing, perfuming and detangling.

The Prestige fragrance market has proved to be a winning one with P&G—reportedly generating about $2.5 billion a year in sales—so the manufacturer is pursuing options here, too. P&G Prestige signed a licensing agreement to manufacture and distribute women’s scents under the James Bond 007 name.


The launch will be coordinated with the release of the next James Bond movie in 2015. P&G also signed with designers Stella McCartney and Alexander McQueen to develop new fragrances, and released a new Dolce & Gabbana scent, Dolce, in March.

Brand Cuts Ahead

However, these profitable brands may not be enough to propel the CPG manufacturer to where it wants to be in Beauty—or otherwise. In the last couple of months, P&G has announced an ambitious—and aggressive—plan to restore greater sales and higher profitability, as well as market expansion. It all stems back to focusing on its key, most dynamic, best-selling brands and cutting under-performers. Up to 100 of its brands (half of its holdings) may be headed for the selling block—even Ivory soap, its first branded product in the U.S. market more than 135 years ago.

Simultaneously, P&G, which also owns Pampers, announced plans to enter the adult diaper market, counting on baby boomers to generate another billion-dollar brand.

Corporate Sales: $84.2 billion
Beauty Sales: $20 billion

A.G. Lafley (L) took the reins at P&G for a second time, when Bob McDonald announced his sudden retirement.

Major Products: Beauty Care, Hair Care and Color; Prestige (Fragrances, Prestige Skin Care); and Salon Professional. By category, per above, “leadership” brands include: Cover Girl, Max Factor, Olay, Old Spice, Safeguard and Secret; Head & Shoulders, Herbal Essences, Nice ’n Easy, Pantene and Rejoice; Gucci, Hugo Boss, SK-II; and Wella. Head & Shoulders, Olay, Pantene, SK-II and Wella belong to P&G’s impressive Billion Dollar Brands portfolio. Additional brands include: Dolce & Gabbana, Secret, Camay, Ivory, Aussie, Fekkai, Nioxin, Pert, Rejoice, Sebastian, Vidal Sassoon, Clairol Professional, Natural Instincts, Anna Sui, Christina Aguilera, Stella McCartney, Dunhill, Escada, Lacoste, Naomi Campbell.

New Products: CoverGirl + Olay Concealer Balm, CoverGirl Clump Crusher Extensions Mascara, Cover Girl Outlast Stay Brilliant Nail Color, SK-II Cellumination Essence Ex, Rejoice Eva, Herbal Essences Hydralicious collection, Wellaflex, Hugo Boss Bottled Night, Gucci Guilty Black, Vidal Sassoon hair care.

Comments: Despite a year of teetering sales, vocal criticism from activist investor Bill Ackman, and a management coup that brought back its former CEO, Procter & Gamble still managed to squeak out a corporate 1% rise in net sales of$84.2 billion, on a 2% increase in unit volume, due mostly to price increases.

Beauty net sales, which accounted for 24% of the consumer goods giant’s FY2013 total net sales, decreased 2% to $20 billion on unit volume that was in line with the prior year period. Price increases contributed 2% to net sales growth. Unfavorable geographic mix reduced net sales by 1% due to disproportionate growth in developing regions, which have lower than segment average selling prices. Global market share of the Beauty segment decreased 0.5 points.

In late May, A.G. Lafley was brought back to serve as president and chief executive officer at P&G, stepping in quickly as Bob McDonald suddenly announced his retirement from the company after 33 years. Lafley was also elected to the Board of Directors as chairman. He first joined P&G in 1977 and served as president and CEO from 2000 to 2009. Almost immediately upon being reinstated, Lafley reorganized the company’s executive teams, grouping its global business units (GBU) into four industry-based sectors as part of a plan to improve business performance, as well as re-focus on its all-important U.S. market. The businesses in each sector are focused on common consumer benefits, share common technologies, and face common competitors. Therefore, whereas P&G formerly grouped together Beauty and Grooming(which boosted its overall Beauty numbers in our annual Top 20 Reports of the past few years), this year, Grooming is a separate GBU, and the analysis used here, reflects only Beauty, which consists of Beauty Care, Hair Care and Color, Prestige and Salon Professional.

Commenting on the restructuring, Lafley said: “These changes build on the productivity and organization design work led by Bob McDonald, and will help us get closer to consumers and become more agile with customers.”

Beauty net sales had declined under McDonald.

Top executives quickly focused on the underperformance of key brands Olay and Pantene, stressing the necessity for further innovation, both with these products and with those in the mid-tier section, served well by competitors L’Oréal and Unilever. Olay Fresh Effects was introduced for younger consumers, while Pantone’s Expert Collection was geared to a more prestige audience. P&G says the Expert Collection Age Defy Advanced Thickening Treatment, which launched at the start of 2013, has already become the No. 1 treatment in the hair care salon segment.

Under McDonald, the company had set out a cost-cutting plan, aimed at axing $10 billion by 2016. In efforts to capitalize on key areas of business, McDonald had also moved much of P&G’s personal care headquarters to Singapore. He had also set forth a plan by which P&G would focus on its 40 largest businesses, which account for more than 50% of sales; 20 top innovations, and 10 most important developing markets.

P&G hit a home run when it combined two of its winning products: Head & Shoulders and Old Spice.

Upon his return to P&G, Lafley further announced a focus on core businesses, profitable categories and countries—and making a strong connection with consumers. He has been espousing a doctrine of productivity in addition to innovation and cost reduction, which included layoffs of thousands of employees by the end of the fiscal year. “Innovation and productivity are the two biggest drivers of value creation,” said Lafley in the global manufacturer’s annual report.

In January, following about a dozen years at P&G, Donald J. Loftus retired and was succeeded by Dennis Curran as president and chief executive officer of P&G Prestige, North America.

P&G’s Olay brand continues its enviable status as the top facial skin care brand in the world with approximately 10% global market share. P&G also claims the title of global market leader in the hair care and color market with over 20% global market share behind its Pantene and Head & Shoulders brands. In Prestige Fragrance, P&G says it is the global market leader due primarily to Dolce & Gabbana, Gucci and Hugo Boss fragrance brands.

Prior to P&G’s CEO change, there was talk that P&G’s marginal slide was perhaps due to a lack of a balance in focusing on the various marketplaces. In general, at P&G, Developed Markets (North America, Western Europe, Japan) accounted for 61% of total sales, with Developing Markets (Asia, excluding Japan; Central and Eastern Europe, Middle East & Africa; Latin America) contributing the remainder.

In Hair Care and Color, as well as in Beauty Care, volume was in line with the prior year. Global market share of the hair care and color category was down more than half a point.

Beauty Care saw a low single-digit volume increase in personal cleansing and a mid-single-digit increase in deodorants, driven by innovation and market growth in developing regions; however, there was a mid-single-digit decline in facial skin care, where global market share decreased about a point.

Volume in Salon Professional—also in line with the prior year— saw mid-single-digit growth in developing markets behind new innovations, offset by a low single-digit decline in developed regions from market contraction.

Volume in Prestige stayed on track due to minor brand divestitures and market contraction in Western Europe, offset by innovation and market growth in developing markets.

Several innovative ventures combined P&G iconic beauty brands. For instance, CoverGirl + Olay Concealer Balm united leading makeup and skin care brands for the double duty products consumers crave. Head & Shoulders joined with Old Spice for a particularly smart play in the men’s market, in which P&G announced Los Angeles Angels’ pitcher C.J. Wilson as a spokesperson in a campaign called the “Season of the Whiff.”

To bolster its position in Prestige Fragrance, P&G took on two new big-name brands within a few days of each other, announcinga beauty licensing deal with Stella McCartney (who had formerly been with L’Oréal), and an agreement to develop and market a men’s and women’s fragrance business for Alexander McQueen.

When it comes to ingredients, P&G is eliminating anything questionable. Just last month, P&G announced that they had reached a milestone in removing DEP as an ingredient in their products; 70% of P&G Beauty products are now phthalate-free, which should reach 100% by 2014. All triclosan will also be eliminated by then as well.

All in all, it appears that the company is on track for a quick turnaround, as evidenced with results from the fourth quarter. Lafley said, “The company met its objectives for the fourth quarter and fiscal year, and we will build on these results in fiscal 2014.”

Corporate Sales: $83.7 billion
Beauty & Grooming Sales: $28.5 billion (Beauty: $20.3 billion; Grooming: $8.2 billion)

Major Products: Cosmetics, hair care, hair color, prestige fragrance and cosmetics, salon professional, skin care, antiperspirant and deodorants, blades and razors, electronic hair removal devices, hair care appliances and pre- and post-shave products, from brands including Cover Girl, Dolce & Gabbana, Max Factor, Olay, Gillette, Braun, Old Spice, Venus, Fusion, Secret, Camay, Ivory, Aussie, Fekkai, Head & Shoulders, Herbal Essences, Nioxin, Pantene, Pert, Rejoice, Sebastian, Vidal Sassoon, Wella, Clairol Professional, Natural Instincts, Nice ’n Easy, Anna Sui, Christina Aguilera, Dunhill, Escada, Gucci, Hugo Boss, Lacoste, Naomi Campbell, Oral-B, Crest.

New Products: Pantene Age Defy Collection, Head & Shoulders Fresh & Clean, Olay Professional Pro-X Clear, CoverGirl & Olay Pressed Powder, SK-II Men’s Facial Treatment Essence, Gillette Venus & Olay Razor, Dolce & Gabbana Pour Femme, Olay Regenerist Intensive Repair Treatment, Herbal Essences Honey I’m Strong, Nice ’n Easy Natural Instincts, Wella Koleston Perfect, Christina Aguilera Secret Potion, Max Factor 2,000 Calorie Mascara, Old Spice Champion.

Comments: P&G celebrates its 175th anniversary this year, but things aren’t running quite as smoothly as at other times in its history. Worry about chairman, president and CEO Bob McDonald’s performance, slowing growth in developed markets and results thwarted by increased competition and world economic issues have led to some of the consumer product giant’s uneasiness of late. Still P&G remains in its years-long top slot as the No. 1 Global Beauty Company, once again due to its incorporation of Grooming within its Beauty category.

Pantene scientists partnered with Olay’s anti-aging experts to get to the root of women’s aging hair. One of the results of the 10-year project is Pantene AgeDefy, a line of anti-aging hair care product options featuring Courteney Cox as Pantene ambassador.

At the end of 2011, P&G made a number of organizational changes within the Beauty and Grooming Global Business Unit, which resulted in changes to the company’s reportable segments. These businesses are now based on the nature of the product rather than the consumer of the product. For example, female blades and razors transitioned from Beauty to Grooming, while male personal care products, such as Old Spice and Gillette, moved from Grooming to Beauty.

Overall, while P&G’s growth weakened in domestic markets, it continued its strength in developing markets, which now account for more than a third of corporate sales.

McDonald says P&G’s developing market sales growth has been very strong over the past 10 years. It is now a $32 billion business for P&G, generating 38% of sales and 44% of its unit volume. “We’re focused on our top 10 developing markets where growth prospects are highest, including the important BRIC markets of Brazil, Russia, India and China, where sales have grown an average of 20% over the past decade.”

And there’s lots of more potential out there. In fact, by 2020, the world’s population is expected to reach 7.6 billion—the majority in developing markets—and P&G, like the other giant global manufacturers included here, is setting the stage for winning their business.

In the meantime, North America continues to lead P&G’s net sales with 39%, followed by Western Europe (19%), Asia (18%), Central & Eastern Europe, Middle East & Africa (14%) and Latin America (10%).

Thanks to price increases and a focus on its key markets and brands, P&G pulled off another positive year in 2011, with net sales increasing 3% to $83.7 billion in fiscal year 2012, with more than $10 billion in net earnings.

Beauty accounts for 24% of P&G’s net sales, which increased 2% to $20.3 billion in 2012, on unit volume growth of 2% (this was down from 4% in the same period in the previous year). Price increases contributed 3% to net sales growth. Net earnings decreased 6% to $2.4 billion. Billion dollar brands include Head & Shoulders, Olay, Pantene, SK-II and Wella.

By product category, hair care tops the Beauty list with an 11% share; male grooming accounts for 9%; beauty care (7%); and oral care (6%).

P&G’s prestige division helped boost sales, with volume increasing by a percentage in the mid-single digits. This year SK-II became P&G’s first U.S.-based Asian billion-dollar brand.

According to P&G, the Olay brand remains the top facial skin care brand in the world with approximately 10% of the global market share.

P&G says it is the global market leader in the retail hair care market with over 20% of the global market share with its Pantene and Head & Shoulders brands. Volume in developed regions was down slightly due to market competition.

Sales of Salon Professional products dipped high single digits mainly due to market shrinkage in Europe along with growing competition. Volume in Prestige Products increased mid-single digits.

As with other beauty manufacturers, prestige products lent a helping hand toward increasing the bottom line at P&G, with a mid-single digit increase from entries including the SK-II brand and fragrances including Dolce & Gabbana, Gucci and Hugo Boss.

Old Spice has introduced a new ad campaign to celebrate its Champion scent.

Grooming net sales accounted for 10% of P&G’s total, and also showed an increase—in this case, 1% to $8.3 billion in 2012 on a 1% increase in unit volume (this was down from 5% for the same period in the previous year). Price increases contributed 2% to net sales growth. Net earnings increased 2% to $1.8. Billion dollar brands include Braun, Fusion, Gillette and Mach3.

P&G claims the position of global market leader in the blades and razors market—and in nearly all of the regions in which it competes. Its global blades and razors market share is approximately 70%, primarily behind the Gillette franchise including Fusion and Mach3.

Still, net sales decreased by 1% mainly due to disproportionate growth in developing markets, which have lower than segment average selling prices.

How does P&G plan to get back on track with even better results? Cut costs, focus on key brands and regions and set the course for gaining hundreds of millions of customers.

Earlier this year, the company announced its objective of cutting costs by $10 billion by the close of fiscal year 2016. McDonald stressed that developing markets are key to the future of P&G’s continued success. He said they will focus resources on the 40 largest and most profitable businesses, many of which are in developed markets; on its 20 largest innovations; and on the 10 most important developing markets.

He stated: “Our 40 largest businesses generate more than 50% of sales and nearly 70% of operating profit. They are disproportionately in the U.S. and China, which are P&G’s first and second largest, most profitable markets, respectively.

Our 10 most important developing markets are critical to P&G’s future growth. Between 2010 and 2020, the world’s population will grow by 700 million people, and 95% of this population growth will be in developing markets.”

With its eye on Asia as the area with the most growth potential for beauty over the next five years, P&G made a dramatic organizational change, relocating its Skin Care, Cosmetics and Personal Care headquarters from Cincinnati, OH, to Singapore over the next year. As a result, 25-year P&G veteran Gina Drosos is retiring as group president, Skin Care, Cosmetics and Personal Care, and will be succeeded by Deb Henretta, group president, P&G Asia and Specialty Channel.

In the fourth-quarter, the company’s beauty sales fell 4% to $4.8 billion. Profits were flat in its Beauty division.


Both P&G’s business model and McDonald have been criticized in recent months, especially by activist investor William Ackman. McDonald was backed up by P&G’s board, though Ackman took a stake in the company and is expected to push for change.

With global coverage of this year’s Olympics, P&G made the most of viewership, sponsoring both men’s and women’s Olympians and paralympians, as well as introducing its “Thank You Mom” program, the largest scale initiative in the company’s 175-year history.

CoverGirl received a boost with the addition of two new rock star spokesmodels: Janelle Monáe and Pink. Celebrity chef Giada De Laurentiis has partnered with Clairol Natural Instincts as its new brand ambassador. In September, P&G’s Max Factor brand signed actress/lifestyle icon Gwyneth Paltrow for a six-month stint to model and offer creative advice.

And on the men’s side, Green Bay Packers’ Greg Jennings appeals to fans in Old Spice’s “Believe in Your Smellf” campaign, promoting the brand as the “official deodorant and body wash of the NFL.” Old Spice has introduced a new ad campaign to celebrate its Champion scent.

Beauty & Grooming Sales: $28.2 billion (includes Beauty Sales: $20.2 billion; Grooming Sales: $8 billion)
Corporate Sales: $82.6 billion

Major Products/Brands: Mass, prestige and salon cosmetics, fragrance, hair care, skin care and grooming care marketed under a wide variety of brands including Braun, CoverGirl, Dolce & Gabbana, Fekkai, Gillette, Head & Shoulders, Herbal Essences, Hugo Boss, Max Factor, Nioxin, Olay, Pantene, Rejoice, SK-II and Wella.

New Products: Clairol Nice ’n Easy Foam, Cover Girl Intense Shadowblast Mascara, Gucci Guilty Women’s fragrance, Head & Shoulders Itchy Scalp Care, Herbal Essences Hello Hydration, Olay Pro-X Clear Acne Protocol, Sassoon Demi-Monde.

Comments: In a challenging year—one on which P&G’s Robert A. McDonald, chairman of the board, president and chief executive officer, commented, “This is good performance in a very demanding business and economic environment. It is not yet great performance”—the global consumer products giant managed to pull ahead of last year’s figures, due in large part to targeted growth in diametrically different channels: mass market product offerings in developing regions as well as prestige brands in established areas. For the year ended June 30, 2011, total net sales increased 5% to $82.6 billion.

Head & Shoulders, one of P&G’s billion-dollar brands, grew double digits in developing regions.

Beauty accounted for almost a quarter (24%) of net sales, increasing 3% over the previous year to $20.2 billion on unit volume growth of 4%. Net sales were reportedly impacted 2% due to disproportionate growth in developing regions, which have lower than segment average selling prices, and declines in the higher-priced Prestige Products and Salon Professional categories.

Volume in developing regions increased double digits, while volume in developed regions declined low single digits. Volume in Retail Hair Care grew mid-single digits behind growth in all regions except North America. Developing regions grew double digits thanks to Pantene, Head & Shoulders and Rejoice with expanded distribution and market growth. There was a mid-single-digit decline in North America due to competitive products. Global market share of the hair care category rose slightly. Volume in Female Beauty was up low single digits mostly due to higher shipments of Olay, Venus and Safeguard, as well as expanded growth in developing markets. Volume in the Salon Professional category declined high single digits, due to downsizing brands and a weaker demand.

Volume in Prestige Products declined low single digits due in part to eliminating minor brands and lower shipments in Western Europe. However, volume increased low single digits due to growth of Dolce & Gabbana and Gucci fragrance brands.

Olay Regenerist Micro-Sculpting Cream remains a top seller for P&G.

Grooming accounted for 9% of net sales, which increased 5% to $8 billion on volume growth of 3%. Price increases on blades and razors in Latin America and developed regions contributed 2% to net sales growth. Volume grew high single digits in developing regions and decreased low single digits in developed regions. Gillette Fusion shipments increased double digits behind the continued expansion and success of Fusion ProGlide, while Mach3 shipments increased low single digits due to growth in developing regions.

Overall, there was mid-single-digit growth in the Beauty& Grooming segment in all geographic areas.

By region, North America remained the largest segment, accounting for 41% of net sales; Western Europe was second at 20%; Central & Eastern Europe, Middle East & Africa region accounted for 14%; Latin America, 9%; and Asia, 16%. P&G Brazil has grown sevenfold in just 10 years, with strong double-digit growth in fiscal 2011.

While Beauty sales increased modestly this year, P&G’s ongoing goal is to reach out and touch more people’s lives. As they currently claim to reach 4.4 billion consumers, this leaves nearly 3 billion potential customers throughout the world.

New goals often call for new leadership and, earlier this year, P&G announced what many viewed as a management shakeup, designed to inject new ideas into future development projects.

Personnel changes continue to be announced, with many respected industry veterans retiring.

Most surprising, perhaps, was the announcement that Edward D. Shirley, vice chairman, Beauty and Grooming, would retire from P&G, effective January 1, 2012, after 33 years of service.

Then came the much speculated-upon appointment of Dimitri Panayotopoulos, vice chairman-Global Household Care, to vice chairman-Global Business Units, assuming responsibility for both the Beauty and Grooming and Household Care businesses.

Patrice Louvet, former president, Global Prestige, was appointed president, Global Male Grooming, succeeding Charles V. Bergh who retired from P&G after 28 years.

Joanne Crewes, formerly vice president, Global SKII and Female Beauty, Australasian, ASEAN, India, Japan and Korea, replaces Louvet as president, Global Prestige.

In March, Christopher de Lapuente, group president, Global Hair Care, P&G, left to join Sephora. In April, P&G announced that Robert Jongstra, president, Global Salon Professional, would retire. The same month, Craig Bahner, vice president of North America, Hair Care and Color, said he would leave the company.

At the end of August, John Perry, senior vice president for P&G’s Salon Professional Open Lines, and a 33-year veteran of the salon industry, announced his retirement.

P&G is also reducing and redirecting areas other than its leadership. There’s also a focus on simplifying product lines, transportation, warehousing and packaging. The manufacturer cites packaging simplification as “another big opportunity” for reducing costs and adding to the bottom line. P&G spends over $5 billion annually on packaging materials and more than $250 million on packaging development costs, including salaries for more than 3,000 employees. McDonald says the company is now implementing virtualized end-to-end packaging development tools, “which we believe can drive a 30% reduction in packaging costs and release 30% of the time spent today on package design.”

P&G has also been making the most of standard HDPE bottles. For example, according to a report from Euromonitor, P&G revamped its packaging design for the Vidal Sassoon brand in early 2010, in Taiwan. The new bottle has a round bottom and gradually evolves into a square bottle at the top. Compared to other standard shampoo and conditioner products in Taiwan, Euromonitor says the new bottle makes it look more like a professional hair care brand, enabling the product to retail at a higher price.

Meanwhile, custom design remains strong for P&G’s Prestige stable, where beautiful packaging pays off. Gucci Guilty won a number of FiFis this year, including Best Packaging of the Year-Women’s Luxe.

Sustainable packaging also plays a growing role. In 2010, P&G announced plans to use 100% recyclable rigid plastic for select Pantene, CoverGirl and Max Factor products. This renewable packaging, supplied by Braskem SA, in Brazil, is based on a new material, which is produced by an innovative process that converts sugar cane into HDPE. (For more info, please see ajay.bp.rodmanadmin.com)

In February of this year, the company announced its commitment to pursue LEED certification for all new sites, including its Taicang plant in China.

P&G hit some outstanding marketing high notes in 2010, perhaps most noticeably with Old Spice’s “Smell Like a Man, Man,” which first launched in North America in February 2010, just before the Super Bowl. It has generated 33 million YouTube views and 4 billion total impressions. Within three months of the campaign’s first appearance, volume of Old Spice body wash rose 40%.

In 2011, in an effort to restore some of Pantene’s sales shine, actresses Eva Mendes and Naomi Watts were announced as new celebrity ambassadors for the brand.

In Japan, P&G launched a complete line of Pantene products specifically geared toward regional hair regimens that call for multiple products, following up to eight steps throughout the day, including nighttime, morning and mid-day treatments.

Jennifer Lopez was also signed to contribute her smooth star appeal as global ambassador—and Venus Goddess—for Gillette’s Venus razor.

Management and superstars aside, innovation remains the driving force behind P&G’s strategy, with R&D investments of about $2 billion a year. In 2010, P&G launched eight of the top 25 most successful new products in the consumer products industry in North America, as measured by SymphonyIRI Group.

Beauty & Grooming Sales: $27.1 billion (includes Beauty Sales: $19.5 billion; Grooming Sales: $7.6 billion)
Corporate Sales: $78.9 billion

Major Products: Cosmetics, fragrance, hair care, and skin/beauty/grooming care marketed under brands including Aussie, Braun, Burberry, Camay, Christina Aguilera Perfumes, CoverGirl, DDF, Dolce & Gabbana, Fekkai, Fusion, Gillette, Gucci Fragrances, Head & Shoulders, Herbal Essences, Hugo Boss, Ivory, Lacoste Fragrances, Mach 3, Max Factor, Nice ’n Easy, Olay, Old Spice, Pantene, Puma, SK-II, Wella.

New Products: Olay Professional Pro-X Intensive Wrinkle Protocol, Fekkai Advanced collection, Gillette Fusion ProGlide razors and ProSeries skin care, Head & Shoulders Hair & Scalp range, Cover Girl Simply Ageless Serum Primer and Foundation, Cover Girl Liquiline Blast Eyeliner.

P&G’s CEO, Bob McDonald, set lofty goals, which seem to have paid off.

Comments: Robert A. McDonald kicked off the calendar year at Procter & Gamble, taking over A.G. Lafley’s venerable command as chairman of the board, president and chief executive officer. He made P&G’s purpose a central part of his leadership agenda, with the goal to be the best performing consumer products company in the world. Referring to fiscal year 2010, McDonald said, “Last year, we updated P&G’s growth strategy to connect it explicitly to our company’s purpose. We focused on three specific choices: to grow P&G’s core brands and categories with an unrelenting focus on innovation; to build our business with unserved and underserved consumers; and to continue to grow and develop faster-growing, higher-margin businesses with global leadership potential.”

He added, “Innovation has been—and will continue to be—at the heart of our success.” In fiscal 2010, for the fourth consecutive year, the company invested nearly $2 billion in research and development.

McDonald’s focus on international growth, innovation and revamping key product lines seems to have paid off, especially as the year progressed, with net sales growing 5% to $18.9 billion for the fourth quarter and 3% to $78.9 billion for fiscal 2010. In fact, in the April to June quarter, volume growth accelerated to 8%, the fastest pace of organic growth in 22 quarters.

In the Beauty & Grooming global business unit (which underwent a number of organizational changes since the previous year), Beauty, which includes four of P&G’s 23 billion-dollar brands—Head & Shoulders, Olay, Pantene and Wella—accounted for 24% of net sales. (Pantene and Head & Shoulders account for 20% of the global market share.) This sector also includes cosmetics, female antiperspirant and deodorant, female personal cleansing, female shave care, hair care, hair color, hair styling, pharmacy channel, prestige products, salon professional and skin care.

Grooming, which includes four billion-dollar brands—Braun, Fusion, Gillette and Mach3—contributed 10% of net sales. (Also included are beauty electronics, home small appliances, male blades and razors and male personal care.)

Beauty net sales increased 3% in fiscal 2010 to $19.5 billion on unit volume growth of 3%. Price increases added 1% to net sales growth as earlier price increases taken in developing regions to offset currency devaluations more than offset more recent price reductions in Hair Care. Volume growth was driven by high single-digit growth in developing regions, with developed region volume in line with the prior year. Hair Care volume grew mid-single digits behind growth of Pantene, Head & Shoulders and Rejoice, primarily in Asia and Latin America. Global share of the hair care market on a constant currency basis was in line with fiscal 2009. Female Beauty volume was up low single digits as higher shipments of female skin care and personal cleansing products in developing regions were partially offset by the discontinuation of Max Factor in North America, the fiscal 2009 divestiture of Noxzema and volume share losses on non-strategic personal cleansing brands in developed regions. Salon Professional volume was down double digits mainly due to the exit of non-strategic businesses and continued market contractions. Prestige volume declined low single digits due to continued contraction of the fragrance market.

Grooming net sales increased 3% to $7.6 billion in fiscal 2010 on a 1% increase in unit volume. Price increases, taken primarily in developing regions to offset currency devaluations and across blades and razors, added 4% to net sales. Volume in Male Grooming was up low single digits mainly due to growth of disposable razors in developing regions.

P&G has proclaimed its dedication to sustainability for decades, and in May, the company announced the launch of the Supplier Environmental Sustainability Scorecard and rating process to measure and improve the environmental performance of key suppliers.

In August, P&G announced its latest sustainability initiative. Starting in 2011, select packaging for several of its best-performing, billion-dollar brands—Pantene Pro-V, CoverGirl and Max Factor (which was discontinued in the U.S. this year, but is still a leading global brand)—will use renewable, sustainable, sugarcane-derived plastic, developed with a Brazilian supplier. (For additional info on this packaging project, please see the “Packaging Spotlight” column on page 94 in this issue.)

P&G net sales are expected to increase 2-4% in fiscal 2011.

Beauty Sales: $26.3 billion (includes beauty products: $18.8 billion; and grooming: $7.5 billion) Corporate Sales: $79 billion

Major Products: Cosmetics, fragrances, hair care, antiperspirants and skin/beauty/ grooming care marketed under such brands as Gillette, Pantene, Olay, DDF, Head & Shoulders, Hugo Boss, Dolce & Gabbana, Secret, SK-II, Rejoice, Clairol, Herbal Essences, Cover Girl, Old Spice, Frederic Fekkai, Wella and Aussie.

New Products: Cover Girl Blast Boutique, Cover Girl Outlast Lipstain, Olay Regenerist Microsculpting Cream, Olay Professional ProX, Pantene Beautiful Lengths Shampoo and Conditioner, Herbal Essences Hydralicious, Gillette Series Shave Gels, Gillette Shampoo.

Comments: Plagued by one of the most difficult economic years on record, Procter & Gamble managed to hang on to its No. 1 position as the world’s leading global beauty company, albeit due to its continuing inclusion of grooming in the beauty category. In a year

when consumer spending fell and oil prices and unemployment rose, P&G says it was foreign exchange rates that reduced its fiscal 2009 sales by about four percentage points, or approximately $4 billion, and profit by more than $1 billion. In an effort to control the slide, the global giant gambled on instituting $4 billion in price increases, which according to chairman of the board A.G. Lafley, proved to be an effective measure. At the same time, the company added lower priced products to appeal to a wider global market.

Beauty, at $26.3 billion—including beauty and grooming—accounted for a third of P&G’s net sales in fiscal year 2009, through Cosmetics, Deodorants, Hair Care, Personal Cleansing, Prestige Fragrances, Skin Care, Blades and Razors, Electric Hair Removal Devices and Face and Shave Products. Beauty net sales decreased 4% in fiscal 2009 to $18.8 billion on a 2% decline in unit volume. Price increases to offset higher commodity costs added 2% to net sales. Volume in developed regions declined mid-single digits, while volume in developing regions grew low single digits. Retail Hair Care volume grew low single digits behind growth of Pantene, Head & Shoulders and Rejoice. Volume in Prestige Fragrances declined high single digits and Professional Hair Care volume declined mid-single digits mainly due to market contractions and trade inventory reductions.

Volume in Skin Care declined mid-single digits primarily due to competitive activity affecting shipments of Olay and the divestiture of Noxzema, which was bought by Alberto- Culver. Personal Cleansing volume was down high single digits behind trade inventory reductions, market contractions and divestiture activity. Market shares in key categories within the beauty category were generally consistent with the prior year. Net earnings decreased 7% in 2009 to $2.5 billion mainly due to lower net sales and reduced net earnings margin.

Grooming net sales declined 9% in 2009 to $7.5 billion on a 6% decline in unit volume. Volume in developed regions declined high single digits and volume in developing regions declined mid-single digits.

Despite a slow-up in the economy, P&G has taken bold strides in men’s grooming. In June, P&G acquired Zirh, a premium, male grooming skin care brand. Along with P&G’s acquisition of The Art of Shaving, Zirh supports P&G Beauty & Grooming’s strategy to build the world’s premier male grooming company. It joins Gillette, Old Spice and Braun, as well as a collection of mens’ fine fragrances.

The 172-year-old company retains its hold on brand-building, leading the industry with 23 billion-dollar brands and 20 half-billiondollar brands. Nine of the 23 brands hold the billion-dollar status in Beauty: Head & Shoulders, Olay, Pantene, Cover Girl, Wella, Braun, Fusion, Gillette and Mach3. In June, Cover Girl, thanks in part to the cool allure of spokeswoman Drew Barrymore—and a legion of innovative products and packaging—was its first beauty (cosmetics) brand to hit the $1 billion mark. Here, too, P&G focused on its strategy of utilizing resources to boost its winning brands, discontinuing the U.S. distribution of Max Factor, which P&G said has only about a 1.2% dollar share in the U.S., but generates more than $1 billion in sales worldwide.

Bob McDonald, president & chief executive, P&G

McDonald says P&G plans to continue to focus on growing market share in its core business categories, including Beauty & Grooming, which, he says, is a $300 billion market in which P&G is leading, but with only a 13% share. Plans are to increase market presence in developing areas; extend distribution in retail channels such as Drug, Pharmacy and Perfumery; and expand brand and product portfolios. P&G will also pursue Internet opportunities.

According to McDonald, P&G is a global market leader in the beauty category, with over 20% of the global hair care market, and in skin care, with Olay, the top facial skin care retail brand in the world. Gucci, Hugo Boss and Dolce & Gabbana fragrance brands boost its global market share in Prestige Fragrance.

In September, P&G announced its official sponsorship of the U.S. Olympic Teams for the Vancouver 2010 Olympic Winter Games and the London 2012 Olympic Games. Cover Girl, Olay, Olay Quench, Pantene, Secret and Venus Bob McDonald replaced Lafley as president and CEO; after serving in the capacity for eight years, Lafley moves full-time to chairman of the board. Susan Arnold retired as president of global business units and Hartwig Langer retired as president of global prestige products, leading to an allaround company restructuring, which removed several layers of management.

Cover Girl is the latest P&G beauty brand to achieve $1 billion status.

The world’s largest advertiser is focusing additional ad money on other sporting events, too, particularly men’s. The Olympics announcement came on the heels of P&G’s multiyear agreement with the National Football League and the launch of a global advertising campaign featuring sports stars Tiger Woods, Derek Jeter and Roger Federer.

While fiscal year 2009 may have slightly exceeded the company’s guidance range, it also hit below the belt as to its target growth. But it’s not dampening the firm’s determination or its plans for efficiency, cost-cutting and restructuring. “We want to become a $100 billion company with the speed and agility of a $10 billion company,” said McDonald.

In September, P & G confirmed its fiscal year 2010 and July-to-September quarter outlook for organic sales growth, and stated that it expects to return to organic sales growth in the October-to-December quarter compared to prior year levels, following two quarters of organic sales declines.

Beauty Sales: $27.8 billion (includes beauty products and grooming)
Corporate Sales: $83.5 billion for the fiscal year ended June 30, 2008

P&G offers a dizzying array of top-selling beauty brands, including eight that each reach $1 billion a year in sales.

Products/Brands: Cosmetics, fragrances, hair care, antiperspirants and skin/beauty care marketed under such brands as Pantene, Olay, Head & Shoulders, Wella, Cover Girl, Clairol Herbal Essences, Max Factor, Hugo Boss, Secret, SK-II, Zest, Safeguard, Vidal Sassoon, Clairol Nice ’n Easy, Old Spice, Ivory, Sure. Personal grooming products include Gillette Braun and Fusion.

New Products: Olay Definity Color Recapture Moisturizers, Clairol Perfect 10 At-Home Hair Color, Cover Girl Lash Blast Mascara, Gillette Hair Care Line for Men, Pantene Beautiful Lengths Shampoo and Conditioner, Head & Shoulders reformulated lineup with new packaging and Sebastian Professional Hair Care reformulated lineup with new packaging.

Comments: Innovate and grow! If there’s one word, Procter & Gamble would use to describe itself, it would likely be innovation. P&G reports that sales growth in fiscal 2008 came from a diverse mix of businesses and was driven primarily by innovation. Fiscal 2008 was P&G’s seventh consecutive year of organic sales growth at or ahead of its long-term target range, and according to company CEO A.G. Lafley, brand and new product innovations, particularly in developing markets, accounted for virtually all of it. Despite the wavering economy, rising energy and commodity costs, corporate sales rose $7.5 billion over last year’s figures. For the fiscal year ended June 30, 2008, P&G reported net sales of $83.5 billion. Fourth-quarter profits surged 33%, with sales continuing to meet P&G’s goals of 4-6% growth per year.

Integral to P&G’s growth plan is to accelerate growth in developing markets and among low-income consumers. This proved successful with developing market sales up 18% per year and more than one-third of total company sales growth coming from developing markets. P&G claims to have produced five of the 10 best-selling new products in 2008, including the new Herbal Essences line of products and Olay Definity skin care products. Growth was broad-based across all geographic regions, with mid-single-digit sales growth in developed markets and double-digit sales growth in developing markets.

P&G implemented a change in corporate structure, redefining its global business units. The beauty division now incorporates personal grooming, accounting for the huge leap in comparable sales over last year’s figures. Beauty accounted for 33% of 2008 net sales. A portion of the growth was due to the removal of feminine care from the category and the addition of grooming by way of Gillette. Beauty products accounted for 23%, while grooming had a 10% share.

Thus, P&G’s beauty sales (including grooming) increased by 9% (4% organic growth), to $27.8 billion. Beauty net sales (without grooming) increased 9% in 2008 to $19.5 billion. Skin care volume was up mid-single digits driven by growth on Olay behind the Definity and Regenerist initiatives. P&G’s share of the global skin care market grew slightly. Volume in prestige fragrances was up low-single digits and organic volume was up high-single digits behind new product launches from Dolce & Gabbana and Hugo Boss. Retail hair care volume was up mid-single digits. P&G also recently acquired high-end hair care brand Frederic Fekkai & Co.

P&G estimates the global beauty market at  $230 billion, and claims the lead in hair care (over 20% of the global market share); in skin care (primarily with the Olay brand, the top facial skin care retail brand in the world); and in prestige fragrances (primarily with the Gucci, Hugo Boss and Dolce & Gabbana fragrance brands).

Grooming net sales increased 11% to $8.3 billion in 2008. Gillette Fusion became P&G’s 24th billion-dollar brand. The most recent addition to the billion-dollar brand club, Fusion went from launch to billion-dollar stature in just two years, the fastest in P&G’s 171-year history.

A third of these 10-digit brands fall into P&G’s impressive beauty category, which boasts Head & Shoulders, Gillette, Mach3, Fusion, Braun, Pantene, Olay and Wella. Since the beginning of the decade, P&G has more than doubled its brands that generate over a billion dollars in annual sales—from 10 to 24. In addition, 20 P&G brands now generate between $500 million and $1 billion in annual sales. Of these, nearly a third are beauty brands: Max Factor, CoverGirl, SK-II, Hugo Boss, Venus and Herbal Essences.

P&G recently announced the purchase of Nioxin Research Laboratories, Inc., a leader in the scalp care professional hair care segment. Concurrently, P&G announced the sale of its iconic skin care brand Noxzema to Alberto-Culver, maker of Alberto VO5 shampoo and St. Ives lotion.

To review Beauty Packaging’s in-depth report on P&G, please go to ajay.bp.rodmanadmin.com/ articles/2008/01/pg-our-company-of-the-year.php)