(thing) by Jabbi Thu Apr 15 2004 at 19:59:48

Procter & Gamble

Short extract from the 2003-2004 Fact sheet
Two billion times a day, P&G brands touch the lives of people around the world. We have one of the largest and strongest portfolios of trusted, quality brands, including Pampers, Tide, Ariel, Always, Whisper, Pantene, Bounty, Pringles, Folgers, Charmin, Downy, Lenor, Iams, Crest, Clairol Nice 'n Easy, Actonel, Dawn and Olay. Nearly 98,000 P&G people working in almost 80 countries worldwide make sure P&G brands live up to their promise to make everyday life just a little better.

Solid facts:

                          2002-2003  |  2001-2002  |  2000-2001  |  1999-2000  |  1998-1999

Net sales:          $43,377    |    $40,238     |    $39,244     |     $39,951    |    $38,125
Net profits:          $5,186    |      $4,325     |      $2,922      |      $3,542     |      $3,763
(figures are in millions)

Total employees: 98,000

The company is the oldest one on Fortune 500 list of corporate giants. It deals in fast moving consumer goods and maintains therefore a rather unnoticeable presence save for a small logo delicately placed on the product. Its financial success is doubtless a case study for business students worldwide. Bluntly put it's history is pretty uninteresting, what would you expect from one of the biggest personal and household product manufacturer in the world? Today it is a gargantuan company and you'd be well advised to know a thing or two about it. Competitors include Unilever, Nestle, Colgate-Palmolive and Johnson & Johnson.

Humble beginnings the first century or so: 1837-1937

Cincinnati is the company's hometown. Candle maker William Procter (British immigrant) and apprentice soap maker James Gamble (Irish immigrant) were both on their way further west but were instead brought together by circumstance. William Procter's wife, Martha, was ill and needed medical attention. So they stopped in Cincinnati where she would later die from cholera. The widowed Procter and Gamble would come to marry sisters Elisabeth and Olivia Norris. Their new father-in-law, Alexander Norris, persuaded the men to go into business together. They started the company on October 31, 1837 each one contributing $3,596.47 for capital. The company used as a logo a picture of the man on the moon and thirteen stars, representing the thirteen states that then constituted the U.S.A. During the American Civil War P&G was "awarded" several contracts by the Union army which helped it's economy during those hard times. Candle sales dwindled when modern science caught up with the two son-in-laws in the form of the electric light bulb and P&G cancelled its candle division.

In 1879 a new soap was marketed by P&G, Ivory which is still sold today. It's namesake is a Biblical reference to Psalm 45:8: "All thy garments smell of myrrh, and aloes, and cassia, out of the ivory palaces, whereby they have made thee glad.". The soap's success was because it floated better than any other, which was due to a manufacturing error. A worker at the factory left the machines running while going to lunch and the result was that more air was put into the soap making it float better in water. Hence it's brand slogan "99-44/100% Pure®: It floats". At the turn of the century P&G was producing over 30 types of soap.

Steady growth: 1937-1982

By it's 100th anniversary (1937) the last of the Procters and Gambles (involved with company management) had recently died off. The company was well established with a notable presence in the media by actively advertising and sponsoring in radio and television programs (hence the concept soap opera). Expansion had reached into Canada where they ran a soap manufacturing plant, the acquisitions of Thomas Hedley & Sons Co., Ltd (1930) in England and the Philippine Manufacturing Company (1935) in the Philippines. It was a well-organised company by contemporary standards with specialised divisions like product r&d, market research and brand management. Already P&G produced a few dozen well known products, including Crisco cooking oil, Dreft detergent, Drene shampoo and Ivory and Camay soap.

From then on P&G corporate history would be marked by management reorganisations, takeovers and market expansions. That year net sales reach $230 million. In 1980 sales had skyrocketed to $10 billion dollars, which is an increase of $9.77 billion or 4348%. Of course the value of the dollar during this period more than likely fluctuated so the numbers don't tell the whole story but nevertheless annual sales increased by $230 million in average. New and successful products introduced during this time include Tide detergent and Prell shampoo (both introduced in 1946), Crest toothpaste (1955) with it's cavity preventing fluoride formula wholly approved by the ADA in 1960 which helped sales, Downy fabric softener (1960), Pampers disposable diapers (1961) although sales weren't high the first years, Bounce fabric softener (1972). In 1978 P&G entered the pharmaceutical market by introducing Didronel, a drug used for the treatment of Paget's disease. Two notable expansions into foreign markets were made in Mexico (1948) and Marseilles, France (1954) where it ran a joint venture with local detergent manufacturer Fournier-Ferrier company. In 1957 P&G acquired Charmin Paper Mills which allowed for paper based products, Pampers, etc. In 1960 P&G GmbH opened offices in Frankfurt, Germany. In 1961 P&G opened division offices in Saudi Arabia. In 1963 P&G bought Folgers Coffee and subsidized it's products. Ten years later, 1973, P&G looking eastwards took over Nippon Sunhome Company in Japan and renamed it Procter & Gamble Sunhome Co. Ltd.. In 1957 Neil H. McElroy who took over as company CEO in 1948 resigned to become the U.S. Secretary of Defense. Things remain relatively quiet for the next decade or so, until the greedy eighties when a P&G product drew undesired publicity.

The globalised age of information: 1982-2000

The company's expansion policy continued to yield profits to the shareholders, this seems to be a period in the company's history when reorganisations and restructuring programs are initiated almost annually. Norwich Eaton Pharmaceuticals was bought in 1982 to bolster P&G's presence in the medical market. A year later Always/Whisper feminine pads/tampons appeared on the market and became leading brands within the next few years. Richardson-Vicks became a subsidiary in 1985 bringing to the deal well known brands such as Vicks respiratory products and Oil of Olay beauty products. 1986 two new shampoos made their appearance, Pert Plus and Rejoice, both went on to garner high sales figures. In 1987 the company board of chairmen announced the biggest merger in P&G history coinciding with P&G 150th anniversary. P&G acquired dental hygiene product line Blendax/Blend-a-med which had a strong presence in the European market. Then in 1988 P&G took it's first steps into the biggest consumer market on earth, China. 1989 P&G bought the Noxell Corporation, a company started in 1914 that owned the cosmetics brand Cover Girl and Noxzema.

Then in 1990 P&G bought the Old Spice male personal care product line from the Shulton Company, since then P&G has added new products to the line in an attempt to "enhance" it. In 1991 P&G replaced their logo and slogan to achieve a more globally consistent presence. The very same year P&G expanded into Eastern European countries, fresh meat since the fall of the Berlin Wall; (then) Czechoslovakia, Hungary, Poland and Russia. P&G also acquired Max Factor the famous cosmetics company started in 1909. In 1992 Pantene Pro-V is introduced, the brand had been amongst those acquired by P&G when the bought the Richardson-Vicks company seven years earlier, it became very successful. The next year, 1993, net sales were over $30 billion and more than half of those sales were being made outside the U.S. for the first time in the history of P&G. To celebrate this fact P&G opened a massive office complex on Rokko Island in Kobe City, Japan, further consolidating their oriental position. In 1994 P&G acquired the German company VP Schickedanz specialising in the European tissue and towel market with brands such as Tempo, Bess, Camelia and Demak'up. The same year P&G adds the Giorgio Beverly Hills brand to it's cosmetic product line and in an unrelated action re-established itself in South Africa after the U.S. lifted it's sanctions on it. In 1995 in a case of similar circumstances, looking from a wholly practical business perspective, P&G made a deal with the Vietnamese company Phuong Dong and thereby adding yet more consumers to their ever-growing market. The next year was highlighted by an even more controversial issue as far as domestic (U.S.) consumers were concerned. The FDA passed permission for P&G to use it's calorie-free fat substitute olestra (aka olean) in it's food products. In 1997 P&G acquired Tambrands Inc. the owner of Tampax tampons and brands variations there of and the Mexican Loreto y Pena tissue company to further it's ambitions in Latin America. In 1998-9 three new products Febreze fabric spray, Dryel and Swiffer clothing cleaners are introduced and distributed globally effectively overnight. In 1999 P&G acquired the pet food Iams company and Recovery Engineering "to utilize its understanding of water treatment by developing home water filtration systems under the PUR brand". (whatever the hell that means)

The second millennia: 2000-present (2004)

Wanting to create a better image of itself P&G initiates a "open" internet policy. The website "Reflect: True Custom Beauty" (www.reflect.com) is a good example (one of truly many that P&G has registered either as company and/or product specific related). Although it is nowhere mentioned on the Reflect site P&G refers to it as "our initial Internet brand". The idea, which isn't smart, is that finally individuals (women) can review and pick out of a huge assortment just the beauty accessories needed to make you look your best, just the way you want it because you're so beautiful. In 2000 P&G marketed Actonel in partnership with Aventis Pharmaceuticals Inc.. Actonel's active ingredients is risedronate sodium, it is designed to treat PMD, GIO or Paget's disease. In 2001 P&G bought the Clairol hair care brand from Bristol-Myers Squibb Co. for a measly $4.95 billion. Around the same time P&G announced a "major marketing partnership" with Viacom Plus and MediaVest U.S.A. acting as intermediary. Mel Karmazin president of Viacom Plus had the following to say on the occasion "This unprecedented deal not only takes our long and fruitful relationship with P&G to the next level, it also puts us at the forefront of a new way of doing business.". Nothing newsworthy happens until 2003 when P&G gets permission from the FDA to market Prilosec, a heartburn drug, over-the-counter and in an unrelated move acquires controlling interest in Wella AG, a hair care company.

- Rely. It even absorbs the worry
An episode in it's history P&G would hardly call its proudest moment began in 1980 when hospitals in several states began receiving abnormally many women suffering from toxic shock syndrome. For a while things were rather unclear as to why. TSS was a young disease back then, first diagnosed only two years earlier in 1978. Everyone is susceptible to TSS but on average it is a menstruating female age 15-24 that contracts it. One or two out of every 100.000 (0,01-0,02%) women aged 15-44, according to a study done in 1987, will come to suffer from it in their lifetimes. In 1980 there were 814 submitted cases of TSS in women menstruating, 38 of those resulted in deaths. The next year (1981) reported cases fell down to 470 of which 13 were terminal. In those days Tampax dominated the tampon market only it wasn't owned by P&G, yet. The CDC ascerned that a high percentage (60-70%) of those were using the Rely tampon or a "superabsorbent" tampon. P&G had begun test marketing Rely in 1975 using the slogan "It even absorbs the worry" which they would later come to regret. Rely was made up of artificial fibers as opposed to cotton which provided added absorbency. In fact this was made possible by the fact that incredibly enough tampons weren't classified as medical appliances and therefore needn't be approved by the FDA. P&G quickly discontinued the Rely brand.

- Lurking in dark corners
Around the same time P&G was hurting because of the Rely scandal rumour had it that the company was in some way affiliated with satanism. This turned out to be a persistent rumour, although completely fictitious and unsubstantiated, and would keep the public relations people busy answering phones and replying queries from concerned consumers. Originally fax machines would serve to spread it which later turned into the internet along with the spoken word. The accusations would slightly vary from time to time as often is the case with these things but the point would be the same. Boycott P&G products! To begin with it was said that if one was to draw lines between certain stars in the old logo (which is no longer in use), the number 666 would appear. This assertion will probably only appeal to the most gullible, those who believe in unscientific misconceptions such as astrology. To confuse readers further it was also stated that the P&G CEO had appeared in a talkshow where upon he openly admitted that a large chunk of annual profits were donated to the Satanist Church. The date of this appearance as well as the name of the talk show changed but amongst usual suspects were Sally Jessy Raphael of the Sally Show, Jenny Jones of The Jenny Jones Show and Phil Donahue of DONAHUE. Representatives of each of these talk shows have since signed statements that deny these rumours at the bequest of P&G. Further developements, in 1997, related to these rumours has turned into a corporate travesty as P&G has sued competitor Amway Corp. for spreading this slander with the intent of decreasing P&G sales.

- Cruelty to animals
There are numerous highly aggressive grass roots organizations such as PETA, www.pginfo.net, www.iamscruelty.com, www.pandgkills.com, www.iamskills.com and www.uncaged.co.uk that claim that P&G products are tested on animals using unethical and even illegal methods. P&G owned pet nutrition brand IAMS is especially targeted. Viewers are treated to allegations such as "An estimated 50,000 animals die at the hands of Procter & Gamble every year" or could choose to download a video of animal abuse at notorious animal testing laboratory Huntingdon Life Sciences supposedly ordered by P&G.

Buy - Products taken from 2003 Factsheet

Further reading:
Good sources are the local newspapers Cincinnati Post (www.cincypost.com) and Cincinnati Enquirer (www.enquirer.com), profile at Corporate Watch (http://www.corporatewatch.org.uk/profiles/food_supermarkets/procter_gamble) and of course the official site www.pg.com

Also a book has been written on the history of P&G Soap Opera : The Inside Story of Procter & Gamble by Alecia Swasy.

I like it! 4 C!s