1. Procter & Gamble
Cincinnati, OH
www.pg.com

Corporate Sales: $83.7 billion

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

Key Personnel: Robert A. McDonald, chairman, president and chief executive officer; Werner Geissler, vice chairman, global operations; Marc S. Pritchard, global brand building officer; Jeffrey K. Schomburger, president, global Walmart team; Dimitri Panayotopoulos, vice chairman global business units; Deborah A. Henretta, group president-global beauty care; Virginia C. Drosos, group president on special assignment; Joanne Crewes, president-global prestige; Colleen Jay, president-global retail hair care and color; Patrice Louvet, president-global shave care; Adil Mehboob-Khan, president-global salon professional.

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.