Procter & Gamble
The Procter & Gamble Company (P&G) is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio, founded in 1837[2] by William Procter and James Gamble.[4] It specializes in a wide range of personal health/consumer health, personal care and hygiene products; these products are organized into several segments including beauty; grooming; health care; fabric and home care; and baby, feminine, and family care. Before the sale of Pringles to Kellogg's, its product portfolio also included food, snacks, and beverages.[5] P&G is incorporated in Ohio.[6]
"P&G" redirects here. For other uses, see PG.P&G
October 31, 1837
Worldwide
US$82.01 billion (2023)
US$18.13 billion (2023)
US$14.65 billion (2023)
US$120.8 billion (2023)
US$47.07 billion (2023)
107,000[2] (2023)
- Procter & Gamble Korea
- Procter & Gamble Pakistan
- Procter & Gamble Philippines, Inc.
- Procter & Gamble Australia Pty. Ltd.
- Braun
In 2014, P&G recorded $83.1 billion in sales. On August 1, 2014, P&G announced it was streamlining the company, dropping and selling off around 100 brands from its product portfolio in order to focus on the remaining 65 brands,[7] which produced 95% of the company's profits. A.G. Lafley, the company's chairman and CEO until October 2015, said the future P&G would be "a much simpler, much less complex company of leading brands that's easier to manage and operate".[8] In 2023, the company was ranked 55th in the Forbes Global 2000.[9]
Jon Moeller is the current president and CEO of P&G.[10]
History[edit]
Origins[edit]
Candlemaker William Procter, born in England, and soap maker James Gamble, born in Ireland, both emigrated to the US from the United Kingdom. They initially settled in Cincinnati, Ohio, and met when they married sisters Olivia and Elizabeth Norris.[11] Alexander Norris, their father-in-law, persuaded them to become business partners, and in 1837, Procter & Gamble was created.
From 1858 to 1859, sales reached $1 million. By that point, about 80 employees worked for Procter & Gamble. During the American Civil War, the company won contracts to supply the Union Army with soap and candles. In addition to the increased profits experienced during the war, the military contracts introduced soldiers from all over the country to Procter & Gamble's products.
In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floated in water.[12] The company called the soap Ivory.[12] William Arnett Procter, William Procter's grandson, began a profit-sharing program for the company's workforce in 1887. By giving the workers a stake in the company, he correctly assumed that they would be less likely to go on strike.
The company began to build factories in other locations in the United States because the demand for products had outgrown the capacity of the Cincinnati facilities. The company's leaders began to diversify its products as well, and in 1911 the company began producing Crisco, a shortening made of vegetable oils rather than animal fats.[12]
Beginning in the 1880s, P&G advertised its wares in full-page advertisements in many general-interest magazines. By 1921, it had become a major international corporation with a diversified line of soaps, toiletries, and food products; in that year, its annual advertising budget reached $1 million. In the 1920s, P&G advertised its products on the new medium of radio and, from 1932 forward, was one of the biggest sponsors of daytime serials, which soon acquired the nickname of soap operas.[13] In the television era, P&G sponsored and produced some twenty soap operas across six decades before the last of its shows ended in 2010.[14]
International expansion[edit]
The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation with its 1930 acquisition of the Thomas Hedley Co.,[12] based in Newcastle upon Tyne, England. After this acquisition, Procter & Gamble had their UK Headquarters at Hedley House in Newcastle upon Tyne, until quite recently, when they moved to The Heights, Brooklands. Numerous new products and brand names were introduced over time, and Procter & Gamble began branching out into new areas. The company introduced Tide laundry detergent in 1946,[15] Prell shampoo in 1947[16] and Joy, the first liquid synthetic detergent in 1949.[17] In 1955, Procter & Gamble began selling the first toothpaste to contain fluoride, known as Crest.[12] Branching out once again in 1957, the company purchased paper mills from Charmin and began manufacturing toilet paper and other tissue paper products. Once again focusing on laundry, Procter & Gamble began making Downy-branded fabric softener in 1960 and Bounce fabric softener sheets in 1972.[18] From 1957 to 1968, Procter & Gamble owned Clorox, the leading American manufacturer of liquid bleach; however, the Federal Trade Commission challenged the acquisition, and the U.S. Supreme Court decided against P&G in April 1967.[19]
One of the most revolutionary products to come out on the market was the company's disposable Pampers diaper, first test-marketed in 1961, the same year Procter & Gamble came out with Head & Shoulders.[20] Prior to this point, disposable diapers were not popular, although Johnson & Johnson had developed a product called Chux. Babies always wore cloth diapers, which were leaky and labor-intensive to wash. Pampers provided a convenient alternative, albeit at the environmental cost of more waste requiring landfilling. Amid the recent concerns parents have voiced on the ingredients in diapers, Pampers launched Pampers Pure collection in 2018, which is a "natural" diaper alternative.[21]
Further developments[edit]
Procter & Gamble acquired a number of other companies that diversified its product line and significantly increased profits. These acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals (the makers of Pepto-Bismol), Richardson-Vicks, Noxell (Noxzema), Shulton's Old Spice, Max Factor, the Iams Company, and Pantene, among others. In 1994, the company made headlines for big losses resulting from leveraged positions in interest rate derivatives, and subsequently sued Bankers Trust for fraud; this placed their management in the unusual position of testifying in court that they had entered into transactions that they were not capable of understanding. In 1996, P&G again made headlines when the Food and Drug Administration approved a new product developed by the company, Olestra. Also known by its brand name 'Olean', Olestra is a lower-calorie substitute for fat in cooking potato chips and other snacks.
In January 2005, P&G announced the acquisition of Gillette, forming the largest consumer goods company and placing Unilever into second place.[22] This added brands such as Gillette razors, Duracell, Braun, and Oral-B to their stable. The acquisition was approved by the European Union and the Federal Trade Commission, with conditions to a spinoff of certain overlapping brands. P&G agreed to sell its SpinBrush battery-operated electric toothbrush business to Church & Dwight,[23] and Gillette's Rembrandt toothpaste line to Johnson & Johnson.[24] The deodorant brands Right Guard, Soft and Dri, and Dry Idea were sold to Dial Corporation.[25] In 2001, Liquid Paper and Gillette's stationery division, Paper Mate, were sold to Newell Rubbermaid. The companies officially merged on October 1, 2005. In 2008, P&G branched into the record business with its sponsorship of Tag Records, as an endorsement for TAG Body Spray.[26]
P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study.[27] For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another.[28]
On August 25, 2009, the Ireland-based pharmaceutical company Warner Chilcott announced they had bought P&G's prescription-drug business for $3.1 billion.[29]
P&G exited the food business in 2012 when it sold its Pringles snack food business to Kellogg's for $2.75 billion after the $2.35 billion deal with former suitor Diamond Foods fell short.[30] The company had previously sold Jif peanut butter, Crisco shortening and oils, and Folgers coffee in separate transactions to fellow Ohio-based company Smucker's.
In April 2014, the company sold its Iams pet food business in all markets excluding Europe to Mars, Inc. for $2.9 billion.[31] It sold the European Iams business to Spectrum Brands in December 2014.[32]
Restructuring[edit]
In August 2014, P&G announced it was streamlining the company, dropping around 100 brands and concentrating on the remaining 65, which were producing 95% of the company's profits.[7]
In March 2015, the company divested its Vicks VapoSteam U.S. liquid inhalant business to Helen of Troy, part of a brand-restructuring operation. This deal was the first health-related divestiture under the brand-restructuring operation. The deal included a fully paid-up license to the Vicks VapoSteam trademarks and the U.S. license of P&G's Vicks VapoPad trademarks for scent pads. Most Vicks VapoSteam and VapoPads are used in Vicks humidifiers, vaporizers and other health care devices already marketed by Helen of Troy.[33]
Later that same year in July, the company announced the sale of 43 of its beauty brands to Coty, a beauty-product manufacturer, in a US$13 billion deal. It cited sluggish growth of its beauty division as the reason for the divestiture.[34][35][36] The sale was completed on October 3, 2016.[37]
In February 2016, P&G completed the transfer of Duracell to Berkshire Hathaway through an exchange of shares.[38]
In December 2018, Procter & Gamble completed the acquisition of the consumer health division of Merck Group (known as EMD Serono in North America) for €3.4 billion ($4.2 billion) and renamed it as Procter & Gamble Health Limited in May 2019.[39][40]
In November 2018, P&G unveiled a simpler corporate structure with six business units that will be effective from July 2019.[41]
In 2023, the company began optimizing its product offering. As part of this strategy, it plans to eliminate the bottom 25% of SKUs, which contribute very little to absolute retail sales. According to other comparable companies, a similar share of SKUs represents between 2% and 2.5% of its turnover at a global level.[42][43]
Controversies[edit]
Price fixing[edit]
In April 2011, P&G was fined €211.2 million by the European Commission for establishing a price-fixing cartel for washing powder in Europe along with Unilever, which was fined €104 million, and Henkel. Though the fine was set higher at first, it was discounted by 10% after P&G and Unilever admitted running the cartel. As the provider of the tip-off leading to investigations, Henkel was not fined.[96]
Toxic shock syndrome and tampons[edit]
Toxic shock syndrome (TSS) is a disease caused by strains of the bacteria Staphylococcus aureus. Most people have these bacteria living in their bodies as harmless commensals in places such as the nose, skin, and vagina. The disease can strike anyone, not only women, but the disease is often associated with tampons. In 1980, 814 menstrual-related TSS cases were reported; 38 deaths resulted from the disease. The majority of women in these cases were documented as using super-absorbent synthetic tampons, particularly the Rely tampon created by Procter & Gamble.[97] Unlike other tampons made of cotton and rayon, Rely used carboxymethylcellulose and compressed beads of polyester for absorption.
In the summer of 1980, the Centers for Disease Control released a report explaining how these bacterial mechanisms were leading to TSS. They also stated that the Rely tampon was associated with TSS more than any other brand of tampon. In September 1980, Procter & Gamble voluntarily recalled its Rely brand of tampons from the market.[98] Since the 1980s, reported cases of TSS have dramatically decreased.[99]
Child labor and forced labor[edit]
According to a 2016 report by Amnesty International, palm oil provider Wilmar International, the world's biggest palm oil grower in 2016 and supplier of raw materials to Procter & Gamble, profited from 8 to 14-year-old child labor and forced labor. Some workers were extorted, threatened, or not paid for work. Some workers also suffered severe injuries from toxic banned chemicals.[100]
Animal testing[edit]
Procter & Gamble has received criticism from animal advocacy group PETA for the practice of testing on animals.[101]
On June 30, 1999, Procter & Gamble announced that it would limit its animal testing practices to its food and drug products which represented less than 20% of its product portfolio.[102] The company invested more than $275 million in the development of alternative testing methods.[103]
Other products[edit]
In 2002, P&G was sued for its ads falsely suggesting to the consumers that the drug Prilosec could cure heartburn in a day.[104] In December 2005, the Pharmaceutical division of P&G was involved in a dispute over research involving its osteoporosis drug Actonel. The case was discussed in the media.[105]
Corporate diversity[edit]
In January 2019, CEO David Taylor said in Switzerland: "The world would be a better place if my board of directors on down is represented by 50% of the women. We sell our products to more than 50% of the women." Also in January 2019, The Wall Street Journal noted the company's board of directors had more than twice as many men as it does women.[142] As of mid-2020, the board of P&G consisted of an equal number of men and women.[143][144]
CEO-to-worker pay ratio[edit]
For the first time in 2018, a new Securities and Exchange Commission rule mandated under the 2010 Dodd-Frank financial reform requires publicly traded companies to disclose how their CEOs are compensated in comparison with their employees. In public filings, companies have to disclose their "pay ratios", or the CEO's compensation divided by the median employee's.[145] According to SEC filings, P&G paid its CEO $17,354,256 in 2017. In 2021, the median employee of Procter & Gamble was compensated $66,326 in 2017, and ratio between CEO pay to median worker pay was 309-to-1, compared to median of 141-to-1 across the S&P500 and the Russell 1000.[146][147]
