As part of a massive streamlining exercise, Procter & Gamble will be dropping a majority of its brands to focus on its top earners.
The largest consumer products firm today, Procter & Gamble will sell, discontinue, merge or eliminate up to 100 brands in the next two years as part of a cost-cutting exercise – focusing on its top 70 to 80 brands.
These 70 to 80 brands that will remain have accounted for 90% of the company’s sales and more than 95% of its profit in the past three years, said chief executive officer A.G. Lafley on an earnings call last Friday.
According to a Bloomberg article, Lafley said: “This will be a much smaller and less complicated company of brands that will be easier to operate.”
Earlier, P&G has already sold several brands such as pet-food brands Iams, Eukanuba and Natura to Mars and Pringles to Kellogg Co.
The Bloomberg article also said that the company’s remaining brands will be organized into a dozen business units in the four sectors.
However, while the company did not specify which brands would be sold or discontinued, speculations have been rampant. Brands such as Head & Shoulders, Olay, SK-II, Pantene, Wella, Gillette, Fusion, Mach3, Always, Crest, Oral-B, Vicks, Ace, Ariel, Dawn and Downy are listed as its billion dollar brands.
This is likely to have effect on its agency partners globally. According to its last annual report in 2013, P&G spends more than US$9.7 billion on advertising globally. It was also mentioned that the company intends to cut marketing budgets and move to more “efficient digital spends”, in an AdAge article.
UPDATE: A spokesperson told Marketing that the company has yet to publish the list of businesses and brands it intends to exit as the process has only just begun; and that the company cannot comment on the implications for Asia and its relevant agency partners in the region.
In its last financial report, Asia pulled in 18% of its global net sales.
The firm has been making a series of major changes to its business in 2012, announcing a major productivity plan with plans to cut costs of US$10 billion over the next five years. It also has been restructuring its marketing and communications operations. (Read also: P&G scraps marketing titles within and our interview with P&G’s Asia marketing chief last year.)