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PARIS — If Procter & Gamble Co. were to sponsor a musical, it would have to be “Hair.”
This story first appeared in the November 30, 2012 issue of WWD. Subscribe Today.
Its retail hair-care and color activity has blossomed into the company’s largest beauty and grooming segment, boasting two “billion-dollar” brands — Head & Shoulders and Pantene.
“The broad vision is really centered around making hair dreams come true,” said Colleen Jay, president of global retail hair care and color at P&G. “We want to give women and men around the world the hair they’ve dreamed of, no matter what their income, their social status, their geography. That’s our broad mantra.”
Indeed, a focus on innovation has yielded numerous game-changing introductions.
In 1934, P&G’s retail hair-related business was kicked off with the launch of Drene, the first detergent-based shampoo, which is no longer marketed. Then 13 years later came the introduction in the U.S. of Prell, the original synthetic shampoo (that was sold in 1999 to Prestige Brands International), and, in 1986, P&G came out with Pert Plus, the first two-in-one shampoo-and-conditioner product.
P&G’s Clairol — with brands such as Nice ’n Easy, Herbal Essences and Hydrience — was acquired in 2001 from Bristol-Myers Squibb for $4.95 billion (its largest acquisition at that point and one that brought P&G into the hair-color arena). Among the brand’s major launches was Nice ’n Easy Root Touch-Up in 2005, which was designed to cover gray roots in 10 minutes.
Another major acquisition came in 2003, when P&G closed on the stock purchase agreement with the family shareholders of Wella AG, officially becoming the new majority shareholder of the Darmstadt, Germany-based hair-care company that includes brands such as Wellaflex, Shockwaves, Ultra Sheen and Wella Koleston. The price was about $6 billion, and it was a deal that set off months of unrest among the company’s minority shareholders.
In 2008, Frédéric Fekkai was purchased from private equity concern Catterton Partners, launching P&G into the luxury hair segment. Industry sources at the time estimated P&G could have paid $100 million for the business.
This year saw the introduction of Pantene’s AgeDefy Advanced Thickening Treatment, formulated to deliver a noticeable change by increasing hair diameter so a head of hair appears to gain 6,500 fibers after one use.
Geographic expansion has been another driver behind P&G’s retail hair activity. In the Sixties and Seventies, its new products would traditionally be launched in the U.S., prior to being rolled out in Canada and Western Europe, beginning with the U.K. The Eighties and Nineties were decades of expansion into Asia and Latin America.
Today, all geographic markets are sizeable, according to Jay.
“Hair is P&G’s most international [beauty and grooming] business,” she added.
The company bills itself as the global leader in retail hair care, including color, with more than 20 percent of worldwide market share. In P&G’s most recent fiscal year ended June 30, the firm’s activity in volume terms grew in the midsingle digits overall and by high-single digits in developing regions.
The business is a mix of “iconic brands” — from prestige to midtier, big to small, said Jay. One of its headline brands is Head & Shoulders, whose business started in the U.S. in 1961 and now makes more than $2 billion annually. It has posted double-digit growth for 11 consecutive years. In 2010, Head & Shoulders became the largest shampoo brand globally.
“[It] was really the first nice-to-use, very effective dandruff shampoo,” explained Jay. “Geographically, hair has often been the launching point into a geography. Head & Shoulders was the first brand to launch in [Mainland China in 1987].”
Head & Shoulders became the center point for P&G’s beauty development in China, a country that today alongside the U.S. and U.K. is home to P&G’s most developed retail hair-related portfolio.
Pantene — which P&G acquired from Richardson-Vicks in 1985 with Olay and Vidal Sassoon — currently rings up just over $3 billion per year, is sold in more than 140 countries and remains the largest hair-care brand in the world. Among its key launches were the Pantene Pro-V Shampoo Plus Pro-Vitamin Conditioner-in-One and treatment conditioner in the U.S. in 1992 and Pro-V Flexible Hold Hairspray with Elastesse in 1997.
Jay said P&G’s retail hair business begins with consumer insight.
“With that insight, we then say OK, we need to develop a superior product to really address that,” she explained. To reach cash-poor consumers in India, for instance, the company introduced its Pantene products not only in traditional bottles but also in 1 rupee (or $0.02 at current exchange) sachets since 2010, “which really allows us to go more broadly from a distribution standpoint,” continued Jay.
A next step in the business model is communicating “in a way that delivers a value from a consumer standpoint,” she said.
How that’s done depends on the brand, but it often entails celebrities. Swimming superstar Michael Phelps was signed on for a Head & Shoulders advertising campaign, and actress Courteney Cox has been named Pantene Expert’s spokeswoman, for example.
Further, as consumers’ engagement changes, P&G executives try to connect differently with them. Take Aussie in the U.K., where it’s the number-one conditioner brand, despite not having had any TV advertising there. It’s all digital. And Head & Shoulders has a digital tie-in with “China’s Got Talent.”
Meanwhile, looking ahead, there will be an ongoing push to grow the billion-dollar brands, as well as the other labels in the portfolio. Some are “billion-dollar brands of tomorrow,” which include Rejoice (now the market leader in China, where it was launched in 1990), Vidal Sassoon and Herbal Essences, said Jay.
“We’ll always be focused on innovation on our current brands. We will always be looking at broadening our geographic footprint, whether it be in places that we might not be present in now or taking certain brands to broaden their footprint,” she continued. “And we’re continually looking at our portfolio in terms of: Does it span the needs from a consumer standpoint within a given market?”
Vidal Sassoon, for example, is primarily retailed in China, but P&G recently announced the brand would be distributed in North America, too, starting Saturday.
In Brazil, where P&G already sold Pantene and Head & Shoulders, it launched Wella’s ProSeries for the salon-affordable space in May 2011.
“It’s off to a very strong start,” said Jay.
The P&G retail hair business has approximately 1,200 employees globally, not including people working in the plants. Ten percent of that overall workforce is based outside of the U.S.
The activity has six technical centers — where research and development are conducted for the business — scattered around the world, in places such as Singapore, Beijing and Darmstadt. With today’s expanding consumer base, P&G executives believe that is vital, since hair-related needs and desires increasingly vary — sometimes in subtle ways.
Jay said it is a phenomenon that “gives us room to continue to innovate over time.”