Bob McDonald presides at the helm of a global entity with his sights set on achieving world domination with Procter & Gamble brands.
Here are a few facts and numbers he throws out to analysts to explain P&G’s future course.
In the United States, P&G operates in 23 categories with the average American spending $110 per year. Contrast this to world spending of $12 per year on P&G brands. “We want to get to $14 a year for the global average by the year 2015,” McDonald told analysts late last year during a Barclays Capital Back-to-School Consumer Conference. At the time, he was just several months into his new role as chairman, president and chief executive officer of the venerable Cincinnati-based consumer products giant, having succeeded the highly respected A.G. Lafley, who led P&G for nearly a decade. Lafley has since joined the private equity firm Clayton Dubilier & Rice as a special partner.
Stated another way, McDonald wants to reach 5 billion people worldwide with P&G products in five years. Right now, roughly 4 billion people out of the 7 billion worldwide population use P&G brands.
Developing markets already contribute a third of P&G’s revenues. “While the size of our developing market business is larger than many of our competitors’ entire businesses, we still have significant growth opportunities both in the developed and developing markets, he told SN in a written statement.
If McDonald achieves his 5-year goal of extending worldwide annual spending on P&G brands to $14, it would result in $40 billion in additional sales, which is half of P&G’s global sales.
McDonald also adds an inspirational spin. “What is more important is that it enables us to touch and improve the lives of more of the world’s consumers.” This has become a familiar mantra to growing revenues and shareholder equity.
McDonald took over leadership of P&G with the economic crisis in full swing and with P&G’s net sales off 3% to $79 billion at the close of fiscal 2009. P&G will post its 2010 results in August, but McDonald said he is pleased with the growth the company has achieved in the past year. This came as P&G faced high commodity prices, consumers seeking low prices and more value, and retailers under pressure to lower prices and add value to their offering. Foreign exchange currencies also cut deeply into P&G’s top and bottom lines.
As a consequence, McDonald focused on renewing P&G’s spirit through managing costs and cash flow and investing in innovation. The giant company looked to become “flatter, faster, more agile” and attempted to turn its large scale into an advantage. It employed strategies on “where to play” and “where to win.” It also divested its pharmaceutical business for $3.1 billion to concentrate on consumer health care — oral care, feminine care.
“We have the strongest innovation pipeline in the last three decades with new products such as Fusion Pro-Glide, Tide Acti-Lift, Pampers Dry Max and the new Pantene making their debuts with our promise that there is much more still to come.”
Looking ahead, McDonald knows it’s difficult to turn a large enterprise around on a dime. But he pointed to the momentum achieved over the last 12 months, strong innovation in the pipeline, and gains in agility to leverage scale as all boding well for P&G’s future growth. “We are willing to change everything except our purpose, principles and values.”
