P&G; Plans Growth Spurt Consumer Products Industry Giant Wants To Double In Size In 10 Years

Procter & Gamble Co. sold enough soap, toilet paper, toothpaste and other products last year to reap the equivalent of about $6.30 from each person on the planet.

Yet P&G Chairman and Chief Executive John Pepper looks at the consumer giant’s 1996 sales of $35 billion and wants more. Lots more.

Pepper rarely talks to the media and declined to be interviewed for this article. But in a speech in May to investors and analysts in New York - at which reporters were barred from asking questions - Pepper said he wanted to double P&G’s sales to $70 billion annually by 2006.

“We’re going to have to accelerate our rate of growth, and that’s our top priority,” Pepper said.

It seems a tall order.

P&G estimates that its products already can be found in more than 90 percent of all U.S. homes - under kitchen sinks, tucked in medicine cabinets, on laundry room shelves and in refrigerators and cupboards.

After all, the company’s list of U.S. soap and laundry products alone includes: Bold, Dreft, Bounce, Cheer, Era, Tide, Downy and Gain laundry products; Dawn, Ivory, Joy and Cascade dish soaps; and Mr. Clean, Comet and Spic & Span cleansers.

P&G’s paper products division peddles such mainstays as Charmin toilet tissue and Pampers diapers. The health care division includes Crest toothpaste, Vicks products and Pepto-Bismol.

P&G’s food products include Crisco shortening, Duncan Hines cakes, Jif peanut butter, Folgers coffee and Pringles potato chips.

Its beauty care products include Max Factor, Cover Girl and Noxzema makeup and Head & Shoulders, Pantene and Pert Plus shampoos.

In all, P&G is the 18th-largest corporation in the United States, and sells more than 300 brands in 140 countries.

Not bad for a concern founded in 1837 by William Procter and James Gamble to make candles and soap out of hog tallow from Cincinnati’s meat packing industry.

Today, the company is big enough to grow simply by gobbling up other giants.

P&G is buying Tambrands Inc. and its Tampax tampons for $1.85 billion. Tambrands has a 44 percent share of the international tampon market - with $662 million in global sales in 1996 - and almost 50 percent of the U.S. market.

P&G so dominates in the United States that domestic demand for its products grows only about 2 percent a year. Thus, Pepper is looking across the globe to keep profits growing.

The company plans an aggressive expansion in Central and Eastern Europe, southern Latin America and China - whose 1.4 billion people will buy $1 billion worth of P&G products this year.

Jack Trout, a marketing consultant with Trout & Partners Ltd. in Greenwich, Conn., said P&G must guard against losing its grip as it expands overseas.

“It’s different around the world - you can’t just sit in Cincinnati and essentially send out these edicts,” he said. “You’ve got to have flexibility, but most big companies have a very hard time with that.”

Pepper also is insisting that P&G be a leader in introducing new products.

Always bullish on research and development, P&G owns more than 2,500 active patents and employs 1,250 scientists with doctorate degrees. The company claims it has more scientists with doctorates than Harvard, Massachusetts Institute of Technology, Stanford, Tokyo University and London’s Imperial College - combined.

P&G is building a $160 million factory in Cincinnati to manufacture its controversial fat substitute, Olean, which eventually is expected to generate hundreds of millions of dollars a year.

“Up to a point, bigger is better. But beyond some point, bigger is worse,” cautioned James Brock, an economics professor and P&G watcher at Miami University in Oxford, Ohio. “It becomes so large, with too many people, and it becomes impossible to get things done - or it’s extraordinarily challenging to get things done.”

One indication that might already be happening can be seen in recent industry figures showing that Crest toothpaste, the best-selling brand in the United States, now accounts for 26 percent of the U.S. market, down from 35 percent five years ago.

It’s no coincidence that during that same period, Colgate and other competitors stole market share by responding to consumer demand for toothpaste containing peroxide and baking soda - which P&G is only rolling out now.

Gary Stibel, a former P&G marketing executive who now works for The New England Consulting Group, said P&G is not close to becoming too large.

“Any company can get too big - there is always that danger,” he said. “But Procter is so well-managed that doubling its size would not even put it within the realm of even possibly losing sight of its goals. Procter is one of the best-managed companies on earth.”

MEMO: This sidebar appeared with the story: HIGHLIGHTS OF PROCTER & GAMBLE’S HISTORY Associated Press A history of Procter & Gamble Co.: 1837: William Procter and James Gamble form Procter & Gamble and start making and selling soap and candles. 1859: Sales reach $1 million. Employs 80 people. 1879: Ivory soap invented. 1911: Introduces Crisco, the first all-vegetable shortening. 1915: Builds its first manufacturing facility outside the United States, in Canada. 1946: Tide detergent and Prell shampoo introduced. 1948: Begins operating in Mexico - its first subsidiary in Latin America. 1954: Begins operations in Europe. 1955: Crest, the first toothpaste with fluoride, is introduced. 1956: Buys Duncan Hines cake mixes from the Nebraska Consolidated Mills. 1957: Enters the paper products business, buying Charmin Paper Mills. 1961: Pampers diapers tested in Peoria, Ill. Begins operations in Saudi Arabia. 1963: Buys Folgers Coffee. 1973: Begins operations in Japan. 1980: Sales reach $10 billion. 1985: Buys Richardson-Vicks, owners of Vicks and Oil of Olay products. 1988: Begins manufacturing products in China. 1989: Buys Noxell and its Cover Girl, Noxzema and Clarion product lines. 1991: Opens first operation in Eastern Europe, buying Rakona in Czechoslovakia. 1993: Sales exceed $30 billion. 1995: Begins operations in Vietnam. 1996: Sales reach $35 billion and company employs 103,000 people worldwide. The U.S. Food and Drug Administration grants approval of the company’s fat substitute, Olestra. 1997: Buys Tambrands Inc. and its Tampax tampons. Source: Procter & Gamble Co.