Procter & Gamble: Adding More Goods To Its Bag

Oct. 9, 2005
Procter & Gamble Co. gets clearance to acquire Gillette Co.

Now that the Federal Trade Commission (FTC) has cleared the proposed acquisition of the Boston-based Gillette Co., Procter & Gamble Co. CEO, president and chairman A.G. Lafley is excited to get the integration underway.

"The addition of Gillette will broaden our line-up to 22 brands with over a billion dollars in sales and will take us into new product areas, creating tremendous new opportunities to bring great products to consumers, great value to customers ad increase shareholder value," said Lafley in a Sept. 30, 2005, press release.

The press release came on the heels of the effective acquisition date: Oct. 1. The first business day the two companies operated jointly was Oct. 3. Both companies appear on IndustryWeek's IW 50 Best Manufacturing Companies list in 2005.

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Prior to the acquisition, P&G had to divest some brands to avoid overlapping businesses. P&G, as required by the FTC, divested its SpinBrush battery-powered toothbrush. The SpinBrush brand, sold to Church & Dwight Co. Inc., put up to $105 million in P&G's purse. Following closing, the company will divest Rembrandt, a Gillette oral-care product line, and Right Guard -- Gillette's top-selling deodorant.

According to Cincinnati-based P&G, other required divestures will take place during the October to December quarter.

Procter & Gamble Co.
At A Glance

Procter & Gamble Co.
Primary Industry: Chemicals
Number of employees: 110,000

2004 In Review
Revenue: $51.4 billion
Profit Margin: 12.6%
Sales Turnover: 0.9
Inventory Turnover: 6.2
Revenue Growth: 18.5%
Return On Assets: 14.8%
Return On Equity: 40.0%

Gillette Co.
At A Glance

Gillette Co.
Primary Industry: Fabricated Metal Products

2004 In Review
Revenue : $10.5 billion
Profit Margin: 16.1%
Sales Turnover: 1.0
Inventory Turnover: 3.6
Revenue Growth: 13.2%
Return On Assets: 17.0%
Return On Equity: 76.0%
As for challenges, P&G's Folgers Coffee production plant in New Orleans suffered damage and had to be evacuated twice.

According to a Reuters news story, the bulk of P&G's unroasted coffee for its Folgers and Millstone brands is stored in giant silos, which were unharmed by the storm. The plant, which produces more than 50% of the company's coffee, is now re-opened and can be seen in a 30-second television commercial. The commercial thanks consumers for their support.

"This commercial is our way of explaining to consumers why they may not find their favorite Folgers varieties in their stores, and thanking them for their patience as we restock the shelves," said Max Rangel, marketing director for Folgers, in an Oct. 3, 2005, press release.

In the same release the company notes that it will offer a special Folgers Katrina Relief metal can. The can will hit shelves in November.

In terms of other advertising, P&G is leveraging the brand loyalty of the auto-racing world. P&G is partnering with Rahal/Letterman (as in David) Racing to sponsor the racing team's No. 16 car driven by Danica Patrick, the female driver who earned Rookie of the Year status at the 2005 Indy 500 race. Patrick's car will feature P&G's Secret anti-perspirant/deodorant. Patrick also appears in television advertising for the company.

P&G also stepped up its advertising campaign in China by touting its Olay brand of skin care products and Crest toothpaste.

Other P&G brands include Pampers, Bounty, Dawn, Pringles and Downy. Gillette brands include Oral-B, Duracell and Braun.

Traci Purdum, IndustryWeek associate editor, is director of the IW1000, IW U.S. 500 and the IW 50 research programs. She is based in Cleveland.

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