Procter & Gamble Co. sees plenty of pockets of growth ahead, and the $78.9 billion consumer products giant has a detailed plan to exploit each one, the company said at a meeting with Wall Street analysts on Thursday.
“There’s plenty of room to keep growing,” declared Bob McDonald, chairman, president and chief executive officer of P&G. “We will out-innovate our competition over the long term, and that’s why we think we will win.”
P&G has spent the last 18 months mapping out its growth strategy for the next five to six years, and the company unveiled its plan in true P&G form: five concise bullet points. The strategy includes expanding the existing portfolio, developing adjacencies, growing share, growing markets and entering new categories with “disruptive innovation.”
Jon Moeller, chief financial officer, reminded analysts that P&G currently competes in 38 product categories across 180 countries, and there is plenty of “white space” to fill in across categories, countries, price tiers and channels. In the U.S., P&G’s most developed market, the company operates in 35 different categories. Its average category portfolio across its top 50 markets is 19, and over the next six years P&G aims to grow that number to 24 categories, said Moeller.
China remains a tremendous opportunity. The company said the world’s most populous market will add 270 million middle income and affluent consumers over the next decade.
Worldwide, P&G currently generates 40 billion consumer purchases a year, and the company aims to grow that number to 60 billion.
“The growth opportunity is huge and we have the detailed plans to seize that opportunity,” said Moeller.
McDonald reiterated that “innovation is the lifeblood of our company,” and emphasized, “promotions may win quarters, but innovation wins decades.” It’s what has grown Olay from roughly a $200 million North American brand into a $3 billion global skin care brand with multiple “boutique” ranges, including the premium-priced antiaging line Olay Pro-X. The company divides innovation into four types, namely commercial innovation (perhaps most evidenced by the “Smell Like a Man, Man” Old Spice campaign); sustaining innovation, or introducing upgraded products; transformational or breakthrough innovation with an existing brand, and disruptive innovation designed to create new categories.
Ed Shirley, vice chairman of P&G’s $27 billion global beauty and grooming business, said the division’s new organizational structure is organized around both genders, rather than by category, and has resulted in a simplified and more productive cost structure that focuses on “fewer, bigger initiatives.”
“We have everything we need to win,” said Shirley. “Our goal is to get into more markets. We believe we have the [right] brand and portfolio.”
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