Warc, 5 August 2014
CINCINNATI: Procter & Gamble will sell or discontinue up to 100 brands over the next couple of years in order to focus on 70 to 80 core strategic brands, the company's chief executive told analysts on Friday.
Although AG Lafley did not name which brands will be shelved from the FMCG giant's portfolio, he did remark that its top 70 to 80 brands accounted for 90% of sales and a full 95% of profits, USA Today reported.
As the company unveiled year-end profits of $11.6bn on sales of $83.1bn, Lafley said P&G's organic sales would have grown 4%, instead of 3%, if it had already divested its non-core brands.
And in an interview with the Cincinnati Enquirer, he said P&G will axe even some of its major brands if they don't fit into the core categories of beauty, fabric care and other businesses.
"Some of our big brands are in industries that are not very attractive; they're not growing, or low margin, or commodities," he said. "If it's not a core brand – I don't care whether it's a $2bn brand, it will be divested.”
It will mean a radical shake-up at P&G as the company restructures itself into four focused industry sectors responsible for about a dozen business units, Marketing Week reported, and it comes about because P&G no longer believes consumers want too much choice.
"There is a lot of evidence in a number of our business categories that the shopper and consumer really don't want more assortment and choice, they want efficient consumer response," Lafley said.
"There's a lot of analysis that more does not drive growth and certainly does not drive value creation," he added.
P&G also informed analysts that it had continued to make efficiencies over the past year, including in marketing, although CFO Jon Moeller went on to say that P&G is "perfectly happy" to reinvest its marketing savings into marketing in other areas.
Data sourced from USA Today, Cincinnati Enquirer, Marketing Week; additional content by Warc