P&G, striving to become as powerful outside the U.S. as within, is moving much more aggressively, swiftly and opportunistically than ever before.
Just since last June, the consumer products giant has bought or started 11 companies on three continents (see accompanying chart), including five in the hard-to-crack markets of China and Russia.
"P&G has recognized that it [has been slow] and will now move quicker on products," said Heather Hay, analyst at J.P. Morgan Securities, New York. "In the past, you might have seen a delay in Europe. The lead time is narrowing."
The reasons for the urgency are clear. Annual unit growth beyond the U.S. borders averages 8% to 11% a year compared to lackluster low single digits in the U.S.
Concrete evidence of P&G's commitment to achieve global supremacy is already in. In 1992, the last year for which figures are available, P&G began closing in on Unilever as the biggest advertiser in spending outside the U.S.
P&G boosted its spending a whopping 35.6% to $1.8 billion, compared to Unilever's 13.5% that put it at $1.9 billion. (P&G is far ahead at $4 billion to Unilever's $2.6 billion when the U.S. is included.)
The proposed purchase of Schickedanz itself is an indication of the new P&G: The company seized the opportunity after a Schickedanz joint venture with Kimberly-Clark fell apart last summer. For an estimated $580 million to $625 million, P&G will get Schickedanz's Camelia feminine hygiene products, doubling its market share in Germany to 50% when combined with Always; the leading German tissue brand Tempo, which also has a foothold in German-speaking markets, Greece, Spain, Italy and Hong Kong, and a promising paper towel business.
But the EU's Cartel Office extended its review beyond the Feb. 21 planned decision date following objections by rivals such as K-C, Johnson & Johnson, Peter Hartmann and Tambrands, fearful that the already powerful P&G would wield too much clout. This forced P&G to wait up to four more months for a decision.
The opportunistic move isn't the only indication that the consumer giant is moving with breakneck speed. In another departure from the past, the company is rolling out P&G's Pampers Ultra Dry Thins in the U.S. and Europe at the same time. And P&G is so enthusiastic about the Russian detergent market that it is taking the risky step of rolling out three new brand names at once, at three different price points.
The no-holds-barred strategy is paying off handsomely in sales if not yet in profits. For the first time, P&G's international sales-$15.6 billion-exceeded that of the U.S.-$14.4 billion-for the fiscal year ended last June. Although last year's earnings of $681 million from international business before restructuring charges still fall below $1.56 billion for the U.S., they are seven times higher than in 1985.
Moreover, P&G forecasts that 60% of sales, up from last year's 52%, will be international by the year 2000.
"P&G's strategy should help foster significantly above-average international unit gains," said Andrew Shore, analyst at PaineWeber, New York.
The big challenge is for P&G to catch up with companies like Colgate-Palmolive Co. Although Colgate's sales outside the U.S. at $4.6 billion are a quarter of P&G's, it is long-entrenched in more markets, operating in 75 countries and selling its products in 170.
In another shift, P&G's key geographical targets for the rest of the decade will be the Far East and Latin America, rather than Japan and Western Europe, where double digit sales increases have hit the skids.
In new markets, P&G will enter in categories it excels in-diapers, detergents and sanitary pads-build its infrastructure and then bring in other categories, such as personal care and health care, Mr. Shore said.
It's no cakewalk, said Gabe Lowy, analyst at Oppenheimer & Co., New York. "They have tough competition. In Asia, Unilever has a presence, and Kao won't let them walk in uncontested ... In Latin America, they'll have a serious battle with Colgate, Unilever and to some extent Gillette."
Key to the global dominance plan is aligning newly acquired business with the company's established stable of ad agencies-Grey Advertising, Saatchi & Saatchi Advertising, D'Arcy Masius Benton & Bowles and Leo Burnett Co.-as soon as possible.
Bringing in these trusted partners helps P&G keep track of all the activity occurring at once. In some countries, such as Russia, where consumer goods categories are exploding, P&G is not only flooding the detergent market with brands, it is also active in emerging categories it can't afford to ignore.
As such, Russia can be viewed as a prototype for P&G's entry into developing markets. Camay soap, Head and Shoulders, Pantene and Wash & Go shampoos, Oil of Ulay skin cream, Blend-a-med toothpaste and Old Spice men's toiletries are all available, new to the market since 1991. But most if not all are imported since P&G has no on-ground manufacturing capability.
With its investment in the Novomsokovsk detergent factory last November, P&G strengthens its position in a basic needs category in which demand is double the supply.
To capitalize on this opportunity, P&G is rolling out all at once its major premium international detergent brand Ariel, its Eastern European brand Tix as a mid-price brand and the Tide name as an economy brand.
It's with Tide that P&G is making the most uncharacteristic move by taking the name of its U.S. premium brand and giving it to the lowest-priced of the three. A P&G spokesman is quick to point out that everything about the product-its formula, pricing and positioning-is different from the product sold in the U.S. and that the Tide name was selected because it's a trademark at least some consumers might be familiar with.
TV spots by Michael Conrad & Leo Burnett, Frankfurt, (U.S. Tide is handled by Saatchi & Saatchi Advertising), convey the message that "Tide is a guarantee of clean clothes."
An announcer tells viewers that a new detergent will soon be available that is popular in many countries. "The majority of people trust it," he says. "It is called Tide." He then names several consumers in other countries, who give their endorsement. A woman from Canada says: "Tide is a detergent on which you can rely and this is important." A Moroccan consumer: "Even if you suggest to me two boxes of another detergent, I would still choose Tide because the natural bio-active ingredients help remove dirt, even strong stains during the soaking process." After a series of these testimonials, the announcer returns to say, "Soon Tide will appear in stores. Ask for it."
Elisabeth Malkin contributed to this story.