Consumer Goods Registry: Packaged Goods
It's no surprise that P&G again tops this year's list with 23 billion-dollar brands to its credit. Find out which 19 other companies keep P&G company on this list of CPG leaders.
Packaged Goods News
1. The Procter & Gamble Company
2007 was a good example of how P&G is designed for growth. Despite increasing energy and commodity costs, P&G grew net sales 12 percent to more than $76 billion. In addition to this growth, P&G completed the integration of Gillette's sales force, distribution networks and billing systems. To further maximize the productivity of its retail sales force, P&G invested O4 Corporation's mobile technology solutions in March 2008. Using O4's software, P&G's retail representatives can more effectively plan visits, execute in-store audits and analyze performance. P&G management can also access results in real-time across multiple geographies, languages and cultures.
2. Unilever PLC
During 2007, Unilever reported significant progress in reshaping the organization to create a leaner, more flexible business structure. Its One Unilever operating model is being implemented in every major country. At the same time, Unilever has shaped its portfolio through disposals and acquisitions, including the sale of Boursin and Lawry's - brands that offered limited growth potential for Unilever. This strategy continues in 2008 with the sales of its North American laundry business and Bertolli olive oil and vinegar business, among others. In support of its global business transformation strategy, Unilever named SAP as its global premium IT solution provider in 2007.
4. Kimberly-Clark Corporation
To improve execution of in-store product promotions, Kimberly-Clark deployed a mobile RFID tagging solution from OATSystems (since acquired by Checkpoint Systems) in 2007. Later in the year, Kimberly-Clark opened a new Innovation Design Studio to help identify innovations, gain key insights and strengthen customer relationships. Located in Neenah, Wis., the facility houses a visualization room with advanced virtual reality technologies and equipment, including a high-tech kiosk called the K-C SmartStation that simulates a person's shopping experience.
A View from Wall Street
Turning on a Dime
By Bill Schmitz, North American Equity Research, Cosmetics, Household and Personal Care Products Analyst, Deutsche Bank Securities Inc.
The old framework for a successful consumer products company was pretty simple: sell more cases this year than last year, leverage additional scale, eliminate non-strategic overhead costs and reinvest the rest in advertising and R&D to drive the virtuous cycle, while letting just enough profit flow through to grow earnings above 10 percent. This has historically made this group one of the best performers in the market over the last 50 years. However, a rising tide of input cost inflation over the last several months has turned this growth algorithm on its side, making managers at companies, like Procter & Gamble, Colgate-Palmolive, Clorox, Kimberly-Clark and Unilever, rethink the way they conduct business to preserve earnings growth in these uncharted waters (or at least uncharted since the 1970's, which was not a fun decade for these stocks).
The industry is now being forced to lean on significant price increases and belt tightening across the income statement to drive growth as gross margin pressures persist. For the first time in a long time, retailers have opened the door to price increases, and these companies have rushed in, taking pricing up more than 5 percent over more than 50 percent of their domestic brand portfolios. Overall, most players remain healthy, private-label growth is elevated but still contained, and competition remains rational as these companies scramble to adjust to a changing environment.
P&G is going back to its roots, driving growth in legacy categories, like baby care, consumer tissue, laundry detergent and home care, as newer beauty businesses struggle to grow. Colgate-Palmolive continues to leverage its globally dominant oral care business to drive top-line growth in almost every market even as its gross margin struggles. Kimberly-Clark is seeing unprecedented growth in its diaper business with the Huggies brand despite lackluster population growth rates, mitigating disappointing sales and operating margin trends in its consumer tissue business as it cedes share to P&G and private-label players.
As we said last year, the world for these stocks isn't ending, and the market is rewarding the defensive attributes of their portfolios with solid relative performance against the broader stock market. However, the growth and innovation challenge persists, and we continue to believe the winners will be the players who can innovate and change with the times. Meanwhile, the losers will be relegated to the junk pile on the bottom shelf of the dollar store, struggling to survive.
| COMPANY | 2007 SALES (millions) | YEARLY SALES GROWTH | BRANDS | |
| 1 | The Procter & Gamble Co. | $76,500 | 12% | Febreeze, Pampers, Prilosec OTC |
| 2 | Unilever plc | $54,982* | 1% | Axe, Hellmann's, Lipton |
| 3 | 3M | $24,500 | 7% | Nexcare, Post-it, Scotch |
| 4 | Kimberly-Clark Corp. | $18,266 | 9% | Cottonelle, Huggies, Kleenex |
| 5 | Henkel KGaA | $17,883* | 3% | Coast, Dial, Purex |
| 6 | Colgate-Palmolive Company | $13,790 | 13% | AJAX, Softsoap, Speed Stick |
| 7 | Kao Corporation | $10,435 | 27% | Ban, Curel, Jergens |
| 8 | Newell Rubbermaid Inc. | $6,407 | 3% | Calphalon, Lenox, Sharpie |
| 9 | Reckitt Benckiser | $5,269 | 10% | Airwick, Clearasil, Lysol |
| 10 | The Clorox Company | $4,847 | 4% | Brita, Glad, Hidden Valley |
| 11 | Jarden Corporation | $4,660 | 21% | Coleman, Crock-Pot, Oster |
| 12 | Energizer Holdings Inc. | $3,365 | 9% | Energizer, Playtex, Schick |
| 13 | Church & Dwight Co. Inc. | $2,221 | 14% | Arm & Hammer, Brillo, Orajel |
| 14 | Solo Cup Company | $2,106 | (1%) | Solo, SoloGrips |
| 15 | Spectrum Brands Inc. | $1,995 | 5% | Rayovac, Varta, Remington |
| 16 | SOCIETE BIC | $1,991* | 3% | BIC, CONTE, Tipp-Ex |
| 17 | Tupperware Brands | $1,981 | 15% | Avroy Shlain, BeautiControl, Fuller |
| 18 | ACCO Brands | $1,939 | (1%) | Swingline, Kensington, Rexel |
| 19 | American Greetings | $1,745 | (7%) | American Greetings, Carlton Cards, Gibson |
| 20 | Blyth Inc. | $1,221 | (3%) | Colonial Candle, PartyLite, Two Sisters Gourmet |
* Denotes live exchange rates on Oct. 9, 2008
Packaged Goods News
1. The Procter & Gamble Company
2007 was a good example of how P&G is designed for growth. Despite increasing energy and commodity costs, P&G grew net sales 12 percent to more than $76 billion. In addition to this growth, P&G completed the integration of Gillette's sales force, distribution networks and billing systems. To further maximize the productivity of its retail sales force, P&G invested O4 Corporation's mobile technology solutions in March 2008. Using O4's software, P&G's retail representatives can more effectively plan visits, execute in-store audits and analyze performance. P&G management can also access results in real-time across multiple geographies, languages and cultures.
2. Unilever PLC
During 2007, Unilever reported significant progress in reshaping the organization to create a leaner, more flexible business structure. Its One Unilever operating model is being implemented in every major country. At the same time, Unilever has shaped its portfolio through disposals and acquisitions, including the sale of Boursin and Lawry's - brands that offered limited growth potential for Unilever. This strategy continues in 2008 with the sales of its North American laundry business and Bertolli olive oil and vinegar business, among others. In support of its global business transformation strategy, Unilever named SAP as its global premium IT solution provider in 2007.
4. Kimberly-Clark Corporation
To improve execution of in-store product promotions, Kimberly-Clark deployed a mobile RFID tagging solution from OATSystems (since acquired by Checkpoint Systems) in 2007. Later in the year, Kimberly-Clark opened a new Innovation Design Studio to help identify innovations, gain key insights and strengthen customer relationships. Located in Neenah, Wis., the facility houses a visualization room with advanced virtual reality technologies and equipment, including a high-tech kiosk called the K-C SmartStation that simulates a person's shopping experience.
A View from Wall Street
Turning on a Dime
By Bill Schmitz, North American Equity Research, Cosmetics, Household and Personal Care Products Analyst, Deutsche Bank Securities Inc.
The old framework for a successful consumer products company was pretty simple: sell more cases this year than last year, leverage additional scale, eliminate non-strategic overhead costs and reinvest the rest in advertising and R&D to drive the virtuous cycle, while letting just enough profit flow through to grow earnings above 10 percent. This has historically made this group one of the best performers in the market over the last 50 years. However, a rising tide of input cost inflation over the last several months has turned this growth algorithm on its side, making managers at companies, like Procter & Gamble, Colgate-Palmolive, Clorox, Kimberly-Clark and Unilever, rethink the way they conduct business to preserve earnings growth in these uncharted waters (or at least uncharted since the 1970's, which was not a fun decade for these stocks).
The industry is now being forced to lean on significant price increases and belt tightening across the income statement to drive growth as gross margin pressures persist. For the first time in a long time, retailers have opened the door to price increases, and these companies have rushed in, taking pricing up more than 5 percent over more than 50 percent of their domestic brand portfolios. Overall, most players remain healthy, private-label growth is elevated but still contained, and competition remains rational as these companies scramble to adjust to a changing environment.
P&G is going back to its roots, driving growth in legacy categories, like baby care, consumer tissue, laundry detergent and home care, as newer beauty businesses struggle to grow. Colgate-Palmolive continues to leverage its globally dominant oral care business to drive top-line growth in almost every market even as its gross margin struggles. Kimberly-Clark is seeing unprecedented growth in its diaper business with the Huggies brand despite lackluster population growth rates, mitigating disappointing sales and operating margin trends in its consumer tissue business as it cedes share to P&G and private-label players.
As we said last year, the world for these stocks isn't ending, and the market is rewarding the defensive attributes of their portfolios with solid relative performance against the broader stock market. However, the growth and innovation challenge persists, and we continue to believe the winners will be the players who can innovate and change with the times. Meanwhile, the losers will be relegated to the junk pile on the bottom shelf of the dollar store, struggling to survive.