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The Procter & Gamble Company

Procter & Gamble headquarters in downtown Cincinnati, Ohio
Type	Public
Traded as	NYSE: PG DJIA Component S&P 100 Component S&P 500 Component
Industry	Consumer goods
Founded	October 31, 1837; 181 years ago (1837-10-31) Cincinnati, Ohio, U.S.
Founders	William Procter James Gamble
Headquarters	Cincinnati, Ohio, U.S.
Area served	Worldwide (except Cuba and North Korea)
Key people	David S. Taylor Chairman of the board, president and CEO[1]
Products	Cleaning agents Personal care products Beauty Care Products Personal Healthcare Products Diagnostics (through SPD Joint Venture)
Brands	See list of brands
Revenue	US$65.06 billion[2] (2017)
Operating income	US$13.96 billion[2] (2017)
Net income	US$15.32 billion[2] (2017)
Total assets	US$120.4 billion[2] (2017)
Total equity	US$55.78 billion[2] (2017)
Number of employees	95,000[2] (2017)
Website	us.pg.com

The Procter & Gamble Company (P&G) is an American multi-national consumer goods corporation headquartered in downtown Cincinnati, Ohio, founded in 1837 by British American William Procter and Irish American James Gamble.^[3] It specializes in a wide range of personal health/consumer health, and personal care and hygiene products; these products are organized into several segments including Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. Before the sale of Pringles to the Kellogg Company, its product portfolio also included foods, snacks, and beverages.^[4]

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,^[5] which produced 95% of the company's profits. A. G. Lafley—the company's chairman, president, and CEO until October 31, 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".^[6]

David Taylor is the current president and CEO of Procter & Gamble.

History

Origins

Candlemaker William Procter, born in England, and soapmaker James Gamble, born in Ireland, both emigrated from the United Kingdom. They settled in Cincinnati initially and met when they married sisters Olivia and Elizabeth Norris.^[7] Alexander Norris, their father-in-law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was created.

In 1858–1859, 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 floats in water. The company called the soap Ivory. 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, began producing Crisco, a shortening made of vegetable oils rather than animal fats. As radio became more popular in the 1920s and 1930s, the company sponsored a number of radio programs. As a result, these shows often became commonly known as "soap operas".

International expansion

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., 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. 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 and Prell shampoo in 1947. In 1955, Procter & Gamble began selling the first toothpaste to contain fluoride, known as Crest. Branching out once again in 1957, the company purchased Charmin paper mills and began manufacturing toilet paper and other tissue paper products. Once again focusing on laundry, Procter & Gamble began making Downy fabric softener in 1960 and Bounce fabric softener sheets in 1972.^[8]

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.^[9] 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 launch Pampers Pure collection in 2018, which is a "natural" diaper alternative.^[10]

Further developments

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 levered 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^[11] of Gillette, forming the largest consumer goods company and placing Unilever into second place. 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,^[12] and Gillette's Rembrandt toothpaste line to Johnson & Johnson.^[13] The deodorant brands Right Guard, Soft and Dri, and Dry Idea were sold to Dial Corporation.^[14] The companies officially merged on October 1, 2005. Liquid Paper and Gillette's stationery division, Paper Mate, were sold to Newell Rubbermaid. In 2008, P&G branched into the record business with its sponsorship of Tag Records, as an endorsement for TAG Body Spray.^[15]

P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study.^[16] For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another.^[17]

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.^[18]

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.^[19] The company had previously sold Jif peanut butter, Crisco shortening and oils, and Folgers coffee in separate transactions to 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.^[20] It sold the European Iams business to Spectrum Brands in December 2014.^[21]

Restructuring

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.^[5]

In March 2015, the company announced it was selling 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.^[22]

In July 2015, 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.^[23][24][25] The sale was completed on October 3, 2016.^[26]

In February 2016, P&G completed the transfer of Duracell to Berkshire Hathaway through an exchange of shares.^[27]

In April 2018, Reuters reported that Procter & Gamble would purchase the consumer health division of Merck Group (known as EMD Serono in North America) for €3.4 billion euros (£2.96 billion; $3.9 billion).^[28]

In November 2018, P&G unveiled a simpler corporate structure with six business units that will be effective as from July 2019^[29]

Finances

For the fiscal year 2018, Procter & Gamble reported earnings of US$9.750 billion, with an annual revenue of US$66.832 billion, an increase of 2.7% over the previous fiscal cycle. Procter & Gamble's Shares traded at over $86 per share in 2017, and its market capitalization was valued at over US$221.5 billion in October 2018.^[30] Procter & Gamble ranked No. 42 on the 2018 Fortune 500 list of the largest United States corporations by total revenue.

Operations

As of July 1, 2016^[update], the company structure has been categorized into ten categories and six selling and market organizations.

• Categories
  
  • Baby Care
  
  
  • Fabric Care
  
  
  • Family Care
  
  
  • Feminine Care
  
  
  • Grooming
  
  
  • Hair Care
  
  
  • Home Care
  
  
  • Oral Care
  
  
  • Personal Health Care
  
  
  • Skin & Personal Care
  
  


• Selling & Market Organizations
  
  • Asia Pacific
  
  
  • Europe
  
  
  • Greater China
  
  
  • India, the Middle East, and Africa (IMEA)
  
  
  • Latin America
  
  
  • North America
  
  

Management and staff

The board of directors of Procter & Gamble currently has 13 members.^[31]

• Frank Blake


• Angela Braly


• Amy L. Chang


• Kenneth Chenault


• Scott Cook


• Joseph Jimenez


• Terry J. Lundgren


• W. James McNerney, Jr.


• Nelson Peltz


• David S. Taylor


• Meg Whitman


• Patricia A. Woertz


• Ernesto Zedillo

In May 2011, Fortune editor-at-large Patricia Sellers praised P&G's board diversity, as five of the company's 11 current directors are female and have all been on Fortune's annual Most Powerful Women list.^[32]

In March 2011, Rajat Gupta resigned from the board after a SEC accusation of Galleon Group insider trading.^[33]

In May 2013, Robert A. McDonald announced his retirement and was replaced by A.G. Lafley, who returned as chairman, president, and CEO.^[34]

Procter & Gamble is a member of the U.S. Global Leadership Coalition, a Washington, DC-based coalition of over 400 major companies and NGOs that advocates for a larger international affairs budget, which funds American diplomatic and development efforts abroad.^[35]

In September 2018, NEWSTAGE reported that Procter & Gamble announces the appointment of Adil Farhat as the new Managing Director for its Nigeria units after the retirement of the previous MD, George Nassar.

Employer recognition

Fortune magazine awarded P&G a top spot on its list of "Global Top Companies for Leaders", and ranked the company at 15th place of the "World's Most Admired Companies" list.^[36]Chief Executive magazine named P&G the best overall company for leadership development in its list of the "40 Best Companies for Leaders".

In October 2008, P&G was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc. and was featured in Maclean's newsmagazine. Later that month, P&G was also named one of Greater Toronto's Top Employers, which was announced by the Toronto Star newspaper.^[37]

In October 2013, the company was named the fourth-most in-demand employer in the world according to analytic data sourced by Linkedin.^[38]

In August 2013, P&G was named the 14th-hardest company to interview for by Glassdoor.^[39] In November 2013, Glassdoor also named them as a top 25 company for career opportunities.^[40] In February 2014, Glassdoor placed P&G 34th on their annual Best Places to Work list.^[41]

In November 2014, P&G came out publicly in support of same-sex marriage in a statement made by William Gipson, P&G's chief global diversity officer.^[42]

In November 2015, P&G was named the Careers in Africa Employer of Choice 2015 following a survey of over 13,000 African professionals from across the globe. P&G was also recognised as the most desirable FMCG business to work for in Africa.^[43]

In 2016 and 2017, P&G was recognized as one of Forbes World's Most Reputable Companies.^[44][45]

Brands

As of 2015, 21 of P&G's brands have more than a billion dollars in net annual sales.^[46] Most of these brands—including Bounty, Crest, and Tide—are global products available on several continents. P&G's products are available in North America, Latin America, Europe, the Middle East, Africa, Asia, Australia, and New Zealand.

P&G's baby, feminine, and family-care division accounted for 29% of the company's total net sales, the highest of all its divisions. The division includes Always, Bounty, Charmin, Puffs, and Pampers.^[47]

According to Advertising Age, Procter & Gamble spent $4.3 billion advertising their various brands in the United States in 2015, making it the top advertiser in the country.^[48]

Manufacturing operations are based in these countries:

Radio and television production

The P&G production logo from 1986 to 2007

Procter & Gamble produced and sponsored the first radio serial dramas in the 1930s. As the company was known for detergents, the serials became known as "soap operas".^[54] With the rise of television in the 1950s and 1960s, most of the new serials were sponsored and produced by the company (including The Guiding Light, which had begun in 1937 as a radio serial, and made the transition to television in 1952). Though the last P&G-produced show, As the World Turns, left the air in 2010, The Young and the Restless, produced by Sony Pictures Television and broadcast on CBS, is still partially sponsored by Procter & Gamble; as of 2017, it is the only remaining daytime drama that is partially sponsored by Procter & Gamble.

These past serials were produced by Procter & Gamble:

Procter & Gamble also was the first company to produce and sponsor a prime-time serial, a 1965 spin-off of As the World Turns called Our Private World. In 1979, PGP produced Shirley, a prime-time NBC series starring Shirley Jones, which lasted 13 episodes. They also produced TBS' first original comedy series, Down to Earth, which ran from 1984 to 1987 (110 episodes were produced). They also distributed the syndicated comedy series Throb. In 1985, they produced a game-show pilot called The Buck Stops Here with Taft Entertainment Television in 1985, hosted by Jim Peck; it was not picked up. Procter & Gamble Productions originally co-produced Dawson's Creek with Sony Pictures Television but withdrew before the series premiere due to early press reviews. They also produced the 1991 TV movie A Triumph of the Heart: The Ricky Bell Story, which was co-produced by The Landsburg Company, and continue to produce the People's Choice Awards.

In 2013, PGP rebranded itself as Procter & Gamble Entertainment (PGE) with a new logo and an emphasis on multiple-platform entertainment production.

Sponsorships

In addition to its self-produced items through PGE, Procter & Gamble also supports many Spanish-language novellas through advertising on all networks: Azteca América, Estrella TV, Galavisión, MundoMax, Telemundo, UniMás & Univisión. P&G was one of the first mainstream advertisers on Spanish-language TV during the mid-1980s.^{[citation needed]}

In 2008, P&G expanded into music sponsorship when it joined Island Def Jam to create Tag Records, named after a body spray that P&G acquired from Gillette. In April 2010, after the cancellation of As the World Turns, PGP announced they were phasing out soap opera production and expanding into more family-appropriate programming.^[55][56]

Procter & Gamble also gave a $100,000 contract to the winners of Cycles 1 through 3 of Canada's Next Top Model, wherein Andrea Muizelaar, Rebecca Hardy, and Meaghan Waller won the prize.

Procter & Gamble has been a major sponsor of the Summer Olympics since 2012. It sponsored 150 athletes at the London games that year.^[57] They have also sponsored the Winter Olympics since 2014. It'll do so at the 2020 Summer Olympics in Tokyo besides the 2022 Winter Olympics in Beijing. The company's sponsorship includes television ads in which Olympic athletes are portrayed as children to convey the sense that the mothers of these athletes still remember them as infants; other ads stress how Olympic mothers stood by their children through years of training all the way through to Olympic success. 2016's ad for the Rio Games notes upheavals as youths by an American gymnast, Chinese swimmer, Brazilian volleyballer, and German distance runner. The ads all make prominent use of the Ludovico Einaudi orchestral track "Divenire" and related such instrumentals.

The company has actively developed or sponsored numerous online communities,^[58] e.g. BeingGirl.com (launched in 2000)^[59] and Women.com.^[58] As of 2000^[update], the company had 72 "highly stylized destination sites".^[60]

Controversies

Price fixing

In April 2011, P&G was fined 211.2 million euros by the European Commission for establishing a price-fixing cartel for washing powder in Europe along with Unilever, who was fined 104 m euros, 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.^[61]

Toxic shock syndrome and tampons

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.^[62] The Rely tampon was so super-absorbent that one by itself could, in fact, hold one woman's entire menstrual period flow.^{[citation needed]} 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 and agreed to provide for a program to notify consumers. Since the 1980s, reported cases of TSS have dramatically decreased.^[63]

Child labor and forced labor

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.^[64]

Animal testing

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.^[65] The company invested more than $275 million in the development of alternative testing methods.^[66]

Procter & Gamble has received criticism from animal advocacy group PETA for the practice of testing on animals.^[67]

Other products

In 2002, P&G was sued for its ads falsely suggesting to the consumers that the drug Prilosec could cure heartburn in a day.^[68] 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.^[69]

Logo myth

Former P&G logo

P&G's former logo originated in 1851 as a crude cross that barge workers on the Ohio River painted on cases of P&G star candles to identify them. P&G later changed this symbol into a trademark that showed a man in the moon overlooking 13 stars, said to commemorate the original 13 colonies.^[70]

The company received unwanted media publicity in the 1980s due to rumors, spread largely by Amway distributors, that the moon-and-stars logo was a satanic symbol. The accusation was based on a particular passage in the Bible, specifically Revelation 12:1, which states: "And there appeared a great wonder in heaven; a woman clothed with the sun, the moon under her feet and upon her head a crown of 12 stars." P&G's logo consisted of a man's face on the moon surrounded by 13 stars. Some claimed that the logo was a mockery of the heavenly symbol alluded to in the aforementioned verse, thus construing the logo to be satanic. Where the flowing beard meets the surrounding circle, three curls were said to be a mirror image of the number 666, or the reflected number of the beast. At the top and bottom, the hair curls in on itself and was said to be the two horns like those of a ram. The moon-and-stars logo was discontinued in 1985 in a failed attempt to quash the rumors.^[71]

These interpretations have been denied by company officials and no evidence linking the company to the Church of Satan or any other occult organization has ever been presented. The company unsuccessfully sued Amway from 1995 to 2003 over rumors forwarded through a company voice-mail system in 1995. In 2007, the company successfully sued individual Amway distributors for reviving and propagating the false rumors.^[72] The Church of Satan denies being supported by Procter & Gamble.^[73]

"The Talk"

In 2017, as part of the "My Black is Beautiful" platform, P&G released an advertisement called "The Talk".^[74] The advertisement shows African American parents throughout the decades giving their children "the talk" about racism.^[75] The advertisement garnered controversy for several different reasons.^[76] Some people criticized the advertisement for not showing any fathers giving "the talk" while others accused it of being anti-white.^[77] One scene shows a mother warning her daughter about being pulled over by the police. The daughter responds by saying that she is a good driver so her mother doesn't need to worry about her getting a ticket. The mother then implies that she might experience police brutality by being racially profiled and killed.^[78] Several police officers and police groups accused that part of the advertisement of being anti-cop.^[77][79] "The Talk" was accused by Michelle Malkin of the right-leaning National Review of being "liberal advertising". Malkin also called the advertisement "Black Lives Matter propaganda" and accused it of pandering and using identity politics.^[80] Despite the criticism, the advertisement also received a lot of positive reception and praise with some calling it "powerful"^[81] and "thought-provoking".^[74] The advertisement has also won several awards including the 2018 Cannes Lions International Festival of Creativity Grand Prix^[82] and the 2018 Primetime Emmy Award for Outstanding Commercial during the 70th Primetime Creative Arts Emmy Awards.^[83]

CEO-to-worker Pay Ratio

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.^[84] According to SEC filings, Procter and Gamble Corporation paid its' CEO $17,354,256 in 2017. The average worker employed by Procter & Gamble Corporation was paid $60,412 in 2017; thus marking a CEO-to-worker Pay Ratio of 287 to 1.^[85] As of April 2018, steelmaker Nucor represented the median CEO-to-worker Pay Ratio from SEC filings with values of 133 to 1.^[86]

References

Further reading

• McGuigan, Lee, "Procter & Gamble, Mass Media, and the Making of American Life," Media, Culture, and Society 37 (September 2015), pp. 887–903.


• John Kominicki, "James Gamble's Candles And Soap Lit Up Profit: Do It Right: He helped put P&G on an ethical path to top", Los Angeles: Investor's Business Daily, March 6, 2015, p. A3.

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