Thought Bubble is a regular feature on the Mintel blog highlighting multiple viewpoints on one topic from Mintel’s team of expert analysts around the globe. P&G recently announced that it is shedding up to 100 of its brands in a major streamlining effort, divesting smaller brands with declining profit, in order to focus on major brands. Here, a selection of Mintel’s expert analysts have their say on the issue and what this means for P&G products across a variety of markets and sectors. Vivienne Rudd, Director of Innovation & Insight, Beauty & Personal Care The fact that P&G shares rose significantly on AG Lafley’s announcement shows that the markets have been waiting for some time for P&G to do something about its portfolio. The beauty business has been underperforming compared to some of P&G’s rivals, and it certainly makes sense to rationalise the brand overlaps and perhaps strip out some of the sectors where P&G either bought unfamiliar brands or inherited them with some of its acquisitions. While some of its professional salon brands may be safe, its retail prestige haircare brands have a less secure future and few would be surprised to see Frederic Fekkai, for example, sold off. P&G may also take a difficult decision with its colour cosmetics portfolio, considering the long term future of Cover Girl and/or Max Factor. These divestments would yield relatively small savings in terms of comparison to some of the bigger brands, but they would free up time and money to spend on power brands such as Olay and Pantene which have had a rocky ride over the last few years. This would help P&G anticipate and respond more swiftly to consumer trends and new formats, and bring products to market much more swiftly and in a more coherent manner. Emmanuelle Moeglin, Global Fragrance and Colour Cosmetics Analyst The P&G decision to divest or merge more than half of its brand’s portfolio makes sense to fully develop P&G’s potential for growth. For many years, P&G has focused its energy around approximately 50 brands (leadership brands) from the simple fact that they generate 90% of the company’s – $84 billion in 2013 – revenue. Among these 50 brands, 25 generate over a billion dollars in annual sales each and are mostly consumer goods brands such as Gillette, Pantene and Olay. P&G mostly communicate on these brands and will therefore consolidate its effort on brands that have powerful sales or have a high brand equity around the world. Among the power brands, only few are prestige, SKII, Gucci and Hugo Boss for example, and these should remain in the P&G brand portfolio. But lesser performing brands and niche names could be divested, such as The Art of Shaving. This can also affect several fragrance brands like the “sleeping” brand Rochas and celebrity brands Christina Aguilera, Naomi Campbell and Avril Lavigne. Even possibly 2013’s new fragrance licenses acquisitions of Alexander McQueen and Stella McCartney. Jamie Rosenburg, Global Personal Care Analyst P&G has a history of shifting revenue from one brand to another in order to achieve its portfolio growth goals. As it divests these under-performing brands, it will potentially generate billions of dollars to reinvest. For example, in the absorbent hygiene arena, P&G has numerous R&D programs (as evidenced by the patent portfolio) around next-generation absorbent cores and fit. Should it choose to roll out these new innovations, it may accelerate its innovation cycle bolstered by new funds for manufacturing and marketing. Further, P&G is a top ad spender, and as it achieves its stated goal of transiting more of its marketing to social media and other online forums, it is likely to pioneer new social media marketing methods, and technology to support e-commerce and mobile shopping, especially in fast-growing emerging markets. Henrik Møller Jørgensen, Global Household Analyst I believe there will be minimal impact for the fabric care, dishwashing or hard surface cleaning markets based on this. In terms of hard surface cleaning, Viakal is a limescale remover brand marketed in Greece, Italy and the UK. P&G has introduced Mr Proper/Clean in those markets and could easily change brand name. Antikal is the same as Viakal, just in France, Benelux and Germany. Looking at fabric care, Fab is a laundry detergent brand sold in Hong Kong, Malaysia and Singapore with the same design as Tide in other markets, thus prepared for a name change. Dynamo is sold in Malaysia, Indonesia and Singapore, however with Ariel design. For dishwashing, the brand Yes is the Scandinavian version of Fairy and the market leader, it therefore would require some marketing to change name as that’s the only difference between Yes and Fairy. I don’t, however, think the possible savings would cover the marketing cost within a reasonable time frame, if at all. I’m convinced that P&G will try to outsource the products if they can’t get Yes from their own factories. Outsourcing could also be a reaction from other regional (hard surface cleaning) sales offices and P&G has a department for handling issues with brands of local importance. Outsourcing would probably mean slightly lower margins; however efficiency gains (savings) might be higher and the possibility to postpone investment in production capacity might also make outsourcing an attractive solution. Director of Global Insight & Innovation, Beauty & Personal Care, Vivienne Rudd has been writing about the beauty industry for more than 20 years. The former editor of European Cosmetic News and Cosmetics International, Vivienne has travelled the world, interviewing leading industry executives and reporting on corporate, consumer, marketing and product innovation developments Working at Mintel for over two years and working across several beauty categories, Emmanuelle works with clients around the world providing trends, markets and innovation insights and analysis. Emmanuelle is frequently a key speaker at leading beauty tradeshows including Beyond Beauty Paris, World Perfumery Congress and In-Cosmetics Asia. She is regularly called to speak to media globally on beauty, cosmetic and fragrance trends and contributes regularly to international, national and trade publications. Jamie has close to 20 years’ experience as a competitive intelligence analyst and consultant, with a focus on new business opportunity, trend analysis and futures tools. Prior to Joining Mintel, Jamie spent 11 years with Kimberly-Clark Corporation, where he led intelligence projects supporting new product launches, corporate strategy and emerging market growth. Henrik is Global Household Analyst at Mintel and was formerly R&D and Laboratory Manager at danlind, one of the largest manufacturers for the household industry in Northern Europe. Previously, Henrik worked for Teknos Group, one of the largest producers of paint and coatings in Northern Europe, and Novadan, one of the major suppliers of cleaning and hygiene solutions in Denmark. You might also be interested in: No related posts.