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Alex Keith on Driving Growth in P&G’s Beauty Business

Under the leadership of Alex Keith, Procter & Gamble has cracked the code of how to win in beauty.

When it comes to Alex Keith, talk of women’s intuition transcends the cliché.

A chemical engineer by training, Keith has harnessed her instinct for human chemistry to crack a code no one else has been able to solve for the last decade: how to create a winning formula for Procter & Gamble’s beauty business.

After a dismal period, which saw the company sell 41 brands to Coty for $11.6 billion, a deal which many said would be transformational for Coty rather than P&G, the consumer packaged goods giant is once again talking about beauty driving significant growth—both for the group itself and the market overall.

Beauty has regained its mojo.

The numbers tell the story: For fiscal 2018, P&G’s beauty business—which consists of personal care, hair care and skin care—posted sales of $12.4 billion, the third-largest category for the $67 billion group. Moreover, it led the company in terms of growth, with a 9 percent increase versus a 3 percent companywide gain.

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Much of the growth in beauty can be attributed to the return to health of P&G’s skin-care category, driven at first by the success of the prestige brand SK-II in Asia, but more recently by the mass market Olay, as well, whose turnaround in fortunes can be traced to Keith’s return to the beauty category as president of global skin and personal care in 2014 after a four-year stint running P&G’s North American fabric care business.

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“Alex elevated the brand,” says Stephanie Wissink, an analyst at Jefferies, of Olay. “She had capital in the coffers to focus on things, and the first thing she did was listen to the consumer. They doubled down on the things scientifically they knew they could win. For a brand to keep pace with and bring accessible value to the marketplace consistent with prestige is pretty remarkable.”

Keith’s quick results on Olay were noticed internally, too: In 2017, she was given complete oversight of P&G’s beauty business, adding hair care to her remit. Last November, in P&G’s latest reorganization, she was named chief executive officer of P&G Beauty, a newly created position that also makes Keith the only female ceo of a top 10 beauty manufacturer.

She has moved quickly to reestablish P&G’s relevance, reinstating consumer learning as a key tenet of the business, recognizing the changes that have happened industrywide over the past decade and reacting accordingly, through acquiring or incubating new brands and increasing P&G’s exposure to diverse channels and categories.

“We are reasserting what beauty means to P&G and how we intersect the core competencies of P&G with the beauty industry,” Keith says. “What beauty has always been for P&G is a higher growth, higher margin expandable category business. It will remain that growth engine. But what we are doing differently, what is new, is fusing this with the intuition and the artistry unique to the category.”</p

Alex Keith

Alex Keith

As successful as she’s been, Keith still has her work cut out for her: While the company’s personal-care category has continued its slow but steady ascent and skin care has returned to a growth trajectory, P&G’s hair-care business—particularly in the key markets of the U.S., China and Japan—is more challenged.

Keith is confident that the key tenet that unlocked Olay’s recent successes will hold true as she tackles the global hair-care business: a deep and intuitive understanding of consumer desires today. In the late Nineties and early Aughts, that was a core competence that helped drive P&G’s beauty businesses to consistent gains. But once the brands started to struggle, that focus on using consumer insights to drive the business increasingly disappeared.

“When business starts to falter, which is what happened in 2010-2011, the immediate gut reaction of analytical people is to analyze why the business is faltering in a way that is measurable, objective and quantifiable,” Keith says. “But as that was going on, the qualitative assessment of where we might be missing the mark, where our brands weren’t connecting, where the innovation might not be as relevant, wasn’t something that people were comfortable with.

“When I first came back, I was really shocked to find that for a company that puts improving the lives of the world’s consumers at its core, our beauty business had lost the basic understanding of consumers’ views and needs.”

That frank assessment has been key to the Keith turnaround.

“Alex shares in our passion to truly understand the guest,” says Monica Arnaudo, senior vice president of merchandising for mass, hair and accessories at Ulta Beauty. “She is very open to sharing insights and brainstorming new solutions, all in the quest to serve guests and ultimately drive sales. She is a woman of action, and certainly a change agent for P&G, pushing her teams to focus on innovation and evolving the P&G brands and products to meet the needs of the
ever-changing consumer.”

On this day, Keith is speaking in a nondescript, unfurnished meeting room at The Breakers in Palm Beach, Fla., where she has just participated in a panel about sustainability during the Personal Care Products Council annual meeting. After opening the windows and clearing away some stray detritus, she cracks open a bottle of Perrier, ready to get down to business. Despite the lackluster surroundings, the executive is personable and animated as she talks about the challenges of enacting a cultural—and business—transformation.

“One of the biggest things we’ve had to overcome internally is helping people understand that the rational story of our products and the amazing science in the bottle is no longer the most interesting, talkable thing for consumers,” Keith says.
“We tell everyone—if the consumer cares about it, we need to be aware of it. We can choose whether to act on that knowledge or not. But we need to know.”

Keith admits that initially she got some pushback from the teams, who told her they didn’t have time to go see consumers. Her response: “If I have time than you have time,” she recalls.

But she also gave her troops a new framework in which to think about garnering consumer insights, even something as simple as talking to friends about their beauty habits over a glass of wine (“If you have friends and they don’t work in consumer products, they’re actually consumers,” she says) or reading a magazine or blog.

She herself has consistently come up with move-the-needle ideas doing just that. Last August, for example, Keith was reading a story in People magazine about Baby Chanco, a Japanese toddler born with a full head of hair. “Someone should get this baby a Pantene ad!” wrote the reporter.

“I thought, ‘Well, I can do that!’” laughs Keith. She snapped a picture of the story, sent it to the team in Japan and the one-year-old is now a Pantene ambassador, starring in an ad series that encourages women to embrace their individuality. The campaign, along with a product strategy that has premiumized the brand’s offering, has helped reverse five years of sales declines for Pantene in Japan.

Closer to home, the team has been on the money when it comes to identifying hot ingredients. For example, the Pantene Rose Water Collection, a sulfate-, paraben- and dye-free shampoo and conditioner duo launched in North America earlier this year, stars an ingredient that brand executives realized was surging after they tapped into wellness trends in real time. “Four years ago, we would have been sitting around, saying, ‘Rose water is a trend. We should really do something,’ and by the time we actually did something, it wouldn’t be a trend anymore,” Keith says.

But times have changed. Using either consumer insights gleaned from the team or P&G’s partnership with Google, which enables marketers to analyze big data for emerging trends, the company is becoming more agile at innovating. “Now,” Keith continues, “with the capabilities we are building, we are able to identify a trend, understand how it fits into the brand promise and launch it exactly at the time it is having a major upswing. That, ultimately, is the goal.”

eith’s keen sense of listening has fueled her rise through P&G’s ranks. She joined the company directly after graduating from the University of Arizona in the early Nineties and realized after a few years that she wanted to transition from manufacturing into marketing. (“It was the early Nineties when people still dressed for work, and I just thought to myself I’d like a job where I don’t have to wear steel-toed boots and a hairnet every day.”)

She decided to pursue an MBA, and mentioned her plan to Marc Pritchard, then the vice president of skin care at P&G and today the company’s chief brand officer. He convinced her to stay in the company and made her an assistant brand manager on Olay, where she oversaw the development and launch of Olay Complete All Day UV Moisturizer, the first mass market hydrator with sunscreen.

Intuition rather than experience drove that project—“I looked at what the prestige market was doing, what was happening in fashion in terms of minimalism and simplicity and listened to women talk about what they wanted from skin care, and then threaded the needle through all of those dots,” Keith says—a skill that still serves her well today.

While working in the fabric care business, for example, she created Downy Unstopables In-Wash Scent Booster Beads, after her best friend lamented that her new washer and dryer didn’t have a big enough receptacle for her favorite fabric softener, whose scent she adored. Keith did some digging, discovered this was a pain point for other consumers and created Unstopables, marketing them as fragrance for clothing and charging a premium for the product. The launch created a category that today is valued at more than $700 million in sales, of which P&G has more than an 80 percent share.

More recently, there was the resurrection of Olay Daily Facials Cleansing Cloths. Keith was snooping around in the medicine cabinet of a friend’s teenage daughter (having first obtained permission) and noticed she had a sizable collection of facial wipes—but nothing from Olay. Back in 2000, Keith had launched a breakthrough lathering wipe, which at its height had over $100 million in annual sales.

“When I came back, it was double-digit, low-double digit sales. Almost gone,” she says. A trip to the R&D department revealed the technology was still relevant today, so Keith took it to the team, who had been telling her the brand was lacking a strong wipe.

“I told them we have this amazing wipe—
we just need to make sure people understand it,” Keith says. She brushed away protestations of no money for TV advertising, directed them to run a digital campaign and the franchise is back to double-digit growth. “The retailers are excited about it again and all of a sudden it’s back to eye level at the shelf instead of stuffed in the bottom back corner,” she says.

An avid runner who’s working on achieving an eight-and-a-half-minute mile, Keith says she does her best thinking when she’s in motion or in the shower. She has consistently—and consciously—honed her sense of intuition over the last two decades, and encourages her team to do the same.

“As an organization we need to be more intuitive and not always rational and data-driven, which can be a challenge when you have a lot of very smart people, lots of whom have analytical backgrounds,” she says. “Maybe not everyone can have the same level of intuition, but you can steep yourself in the consumer market, the broader world and develop enough of a knowledge base so that you are comfortable and conversant. It’s about honing it and pointing it in the right direction.”

Still, it will take more than a cute baby to turn around the fortunes of P&G’s hair-care business. Geographically, Keith says the business is growing in Latin America, Southeast Asia and Europe, but has struggled in the U.S., China and Japan. To restore growth in North America, Keith tapped Ilaria Resta, now the vice president of P&G’s North American hair-care business and one of the key drivers behind the turnaround of P&G’s European hair-care division.

As with Olay, one of Pantene’s problems is an over-proliferation of sku’s at retail. Under Resta’s leadership, the number of Pantene collections has been cut in half. Keith has also reframed the thinking on the portfolio, from “we run global brands in hair care” to “we run regional portfolios of brands, which will likely expand.”

To that end, P&G hair care—Pantene, Head & Shoulders, Aussie, Herbal Essences, Old Spice and the in-house incubated Hair Food—is now more clearly segmented by consumer, target and/or distribution channel. Aussie, for example, was recently revamped by and for Generation Z, while Herbal Essences is more of an ingredient play.

“It’s a challenge to make sure you don’t have a zero sum game when it comes to consumer targeting, media buying and brand positioning and sales fundamentals,” Keith says.

Resta and her team are also much more attuned to the changing demographics of the category. “Hair care has accelerated over the last two years and is decommoditizing and changing dramatically to mirror society,” says Resta, who notes that the polyculturalism of the U.S., and multiethnic background of Gens Z and Alpha have resulted in an ever-increasing array of hair textures and types that are much more diverse than those in the past.

P&G partnered with Yale University on a cross-cultural study and found that the highest rate of dissatisfaction when it comes to beauty is hair—eight out of 10 women report having bad hair days. “There’s a gap between the hair they have and the hair they want,” says Resta, who mandated that her senior management team come to work one day with their hair in a natural state—no product, no styling aid, no nothing—to better understand the emotional implications of the need gap. (“I learned I look awful with the hair I have. I shouldn’t be the hair care leader of North America with the hair I have,” she jokes of the experiment.)

This work led to Pantene’s new platform—The Power to Transform—which Resta says is already resonating with consumers. “In the past, hair care responded to the functional needs of consumers, like moisturizing,” she says. “Now, we’re seeing that the magic happens when the purpose of the brand is matched with the purpose and desire of the consumer.”

Although P&G doesn’t break out numbers by category, Resta says that Pantene is once again growing both in terms of revenues and penetration. While she wouldn’t quantify what success looks like in terms of a sales figure, Resta notes that when Keith first told her what her expectations were for the business, “I said to her, ‘You must be kidding!’”

That boldness is characteristic of Keith’s leadership approach. “If your expectation is to grow 1 or 2 percent, you can achieve it with what you have tried in the past,” Resta says. “If you get challenged to achieve the impossible, than you start thinking in a completely different, breakthrough way. This is scary but liberating because you’re not attached any longer to what worked in the past.”

Resta, who likens Keith to a “marshmallow wrapped in titanium,” says the ceo consistently pushes teams to move beyond their comfort zone. “She pushes you to take risks, and sometimes I feel like I’m jumping off the cliff of a mountain,” says Resta, “but you turn around and she has a net in case you fall. This is incredibly empowering. If you have someone afraid to take risks or who will punish you for mistakes, your arena is reduced.”

ar from reducing P&G’s beauty arena, Keith has  been actively expanding it through brand acquisition and incubation. Acquisition-wise, P&G bought the natural, direct-to-consumer deodorant brand Native in November 2017, followed by the New Zealand-based Snowberry skin-care business in February 2018, then the prestige skin-care brand First Aid Beauty in July 2018, and most recently Walker & Co., which manufactures razors under its Bevel brand and hair care under Form, both designed for people of color.

While analysts applauded the diversification efforts—the acquired brands give P&G exposure to fast-growing retail channels and categories it had failed to penetrate before—some also questioned the company’s ability to nurture smaller brands.

“P&G typically looks for brands with global potential, and the brands it’s buying now seem too small to do that,” says one analyst, who did not have permission from his company to speak publicly. “My question is what has changed within P&G that is going to be able to create value and not destroy these small brands? What is their role in a company as big as Procter?”

Keith is well aware of the criticism and insists that the company has learned from past mistakes. “These brands are their own ecosystems. The brand founders are all with us. We have not swallowed them up into our core operating system,” she says. “We want to protect the founders from becoming in-house consultants because they want and need to grow their brands and we want and need them to do that.”

“We’ve maintained independence and that has allowed us to grow and do what we’re good at,” says Moiz Ali, Native’s founder and ceo. “At the same time, I’m learning—
I had no idea how to do brick-and-mortar before. And I do feel we’re having an impact. People in P&G have told me their timelines are shorter now that they understand how quickly we do things.”

Rather than meeting with large teams of people, founders like Ali, First Aid Beauty’s Lilli Gordon and Walker’s Tristan Walker meet regularly with cross-category incubation groups that Keith has set up, small teams that are working on projects across the division. Some of their work, like Gemz Hair Care, single-dose shampoos and conditioners, and Hair Food, a direct-to-consumer, natural-based hair-care brand, have already been commercialized. Others are under wraps.

But the goal is to keep the flow of information fluid, making sure that scientific innovation and digital know-how can quickly be cascaded throughout the organization.

“We’re working across the categories of P&G Beauty and are approaching these in a different way than how we would historically approach learning—we’re doing it on a very tight budget, using a [venture capital] approach,” Keith says. “What do you want to learn? How much money is needed? That way we can have many irons in the fire versus having to make our choices too early.

“While it’s still early, we already have a lot of great learnings, particularly in the performance marketing, DTC and search spaces,” she continues. “We’ve discovered that this work requires a different talent profile. We look for individuals who are multiskilled and can operate across functions and have found many of these individuals outside of the traditional marketing function, like in communications, design, market research and R&D.”

While the old P&G model was to buy relatively small brands and blow them up sales-wise—one analyst noted the company used not to be interested in a brand that didn’t have billion-dollar potential—that’s no longer the case. “We recognize the portfolio will probably be a combination of these big powerhouse brands and other, more specialized brands,” Keith says. “As we think about portfolio expansion, we want to be present in the retail channels where the beauty shopper may be and we acknowledge that our core mass market brands are probably not the right mixture on their own to meet the needs of that shopper.”

Such forthrightness is typical of Keith, whose first tenure in P&G Beauty was under strong female leadership as well, including Susan Arnold, who was vice chairman of Beauty and Health, and Gina Drosos, the former group president of female beauty. While Keith says that her goal for the last 15 years of her career has been to lead the P&G beauty business, she doesn’t shy away from talk of perhaps one day becoming the ceo of P&G overall.

“This was my dream job for a long time, and now that I’m in it, it’s a pretty great place to be. This role is going to help me grow my experience base and capabilities. I do feel like this is a great growth opportunity that could prepare me to do something like that,” she says when asked about the top spot.

As to why Keith has been able to effect transformational change when so many others have failed? “I’m pretty good at having a vision for the future, but being grounded in reality,” she says. “Having a vision without understanding the reality makes it very hard to get there, because you don’t know where you’re changing from.
If you’re only grounded in the reality, it makes it very hard to change because you don’t know where you’re going.

“Consistency and focus are key,” she continues. “Change for change’s sake or changing your mind all of the time doesn’t help in a leadership position, particularly when you’re trying to help a business transform itself.”