As P&G Looks to Cut More Than Half Its Brands, Which Should Go?

From Art of Shaving to Zooth, There Are Plenty of Small (And Some Large) Vulnerable Brands

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Two decades ago, the last time Procter & Gamble Co. undertook a massive brand culling like that announced Aug. 1, it tried to consign White Cloud toilet paper to the dustbin of marketing history. Instead, White Cloud became a billion-dollar brand -- for Walmart.

This Art of Shaving Store is among the outliers in P&G's portfolio.
This Art of Shaving Store is among the outliers in P&G's portfolio.

Proving one company's trash is another's treasure, Boca Raton, Fla.-based entrepreneur Tony Gelbart claimed the White Cloud brand for himself, then won a challenge from a remorseful P&G before the U.S. Patent and Trademark Office to keep it. He sold Walmart on using the brand as a private label. And today it has White Cloud products not only in toilet paper but also paper towels, facial tissue, diapers, training pants, baby wipes, chlorine bleach, cotton balls, cotton swabs and laundry detergent.

Mr. Gelbart, CEO of White Cloud Marketing, doubts P&G -- or anyone -- will make the same mistake of letting a valuable brand go for free again. But clearly, deciding the keepers and cuts can be tricky when it comes time to prune brands, as P&G is doing now that it has announcing plans to divest, discontinue or merge 90 to 100 brands.

P&G Chairman-CEO A.G. Lafley said the company will keep its best 70 to 80 brands. That suggests the fate of the rest remain up in the air, depending on how things go over the next year or two as the company completes the process.

So what are the keepers and who's on the bubble? Mr. Lafley indicated the company's 23 brands with sales of $1 billion to $10 billion are keepers. Among that group is Duracell. Despite sales of $2.8 billion as estimated by Deutsche Bank, Duracell might have been a surprise keeper a year ago, as its divestiture has long been a subject of speculation. But it's had its best year in decades, Chief Financial Officer Jon Moeller noted on P&G's Aug. 1 conference call. That owes to pushing rival Energizer alkaline batteries out of Sam's Club in an exclusive deal, and maintaining momentum from that big gain will be a challenge for newly named agency Anomaly.

Most of the 90 to 100 brands likely to be cut are relatively obscure, such as the Zooth children's toothbrush business. It may be impossible to find big players interested in such small opportunities or a private-equity buyer willing to take on a collection of small brands across multiple categories, said one investment banker.

But not all the divested businesses will be small. Mr. Lafley indicated the 90 to 100 brands to be cut have combined sales of around 10% of P&G's $83.1 billion, suggesting at least some pretty big brands in the mix. It's "hard to cut 10% unless you cut big businesses along with it," said Bernstein analyst Ali Dibadj, who believes that among the brands P&G should delete are Duracell (despite Mr. Lafley's remarks), salon hair care, fragrances, Braun (a former but not current billion-dollar brand), Scope, Ivory, Era, Cheer and Fixodent.

Here are three likely on the watch list, from A-Z:

The Art of Shaving: A product of P&G's exploration of high-end men's grooming under former top beauty and grooming executive Ed Shirley, it's a small luxury retail business in a company of big, mostly mass packaged-goods brands.

Ivory: P&G may be the house that Ivory built, but the iconic brand has U.S. sales of under $80 million, according to IRI, and has been shrinking at a 4% annual pace the past five years according to Bernstein. With similar-size brands such as Zest already having been cut, can the legacy keep Ivory around?

Zirh: Another small prestige men's grooming brand acquired on Mr. Shirley's watch, it's another outlier in a company that's now more focused on focus. Bernstein and Euromonitor peg sales at $3 million.

Correction: An earlier version of this article incorrectly said Ivory soap has U.S. sales of under $80 billion. Its sales are under $80 million.

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