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Procter & Gamble (P&G)

Where does P&G’s business stand as David Taylor takes the reins?

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By Jennifer Faull, Deputy Editor

July 29, 2015 | 4 min read

P&G welcomed a new chief executive and the stock market reacted well – but what kind of business has he taken on?

Taylor has replaced A.G Lafley who is exiting the FMCG-giant for the second time.

Laftley’s return brought with it a raft of cost cuts and re-organisation to a business that had struggled for growth in its core markets an products. Half of its brands were shed; animal foods went to Mars for $2.9bn, Duracell went to Berkshire Hathaway for $4.7bn and most recently a $12.5bn deal with Coty saw it rid itself of 43 beauty brands including Olay and Wella.

It has left Taylor, a 35-year veteran of the company, with a stripped back portfolio of its most profitable brands (including Tide, Charmin, Pampers, Gillette, Crest, and Bounty) and a promise, made by Laftley, to return $70bn to shareholders over the next four years.

For some time, Taylor had been considered a front runner for the chief executive role.

“Job after job, increased responsibility after increased responsibility, he keeps contributing and keeps delivering outstanding results,” said Lafley, “And he keeps growing as a manager and a leader.”

An electrical engineering graduate, he has spent over 35 years with the company working across almost all of its brands at some point as well as different departments including marketing.

Most recently he’s served as group president of global beauty, grooming and health care. Prior to that, he was responsible for Family Care and Home Care, both of which delivered consistent double-digit profit and mid-single-digit sales growth under his leadership.

But with his successes come failures; Taylor led P&G’s efforts to extend its tissue business in Asia and Europe, a doomed endeavour that led to the sale of P&G's Tempo brand in Europe and Hong Kong, and the licensing of Charmin & Bounty trademarks in Europe to SCA.

In the immediate future, the Financial Times reports that he will be “joined at the hip” with Lafley.

The coming year is not predicted to be an easy one. Analysts have projected an eight per cent sales decline to $76.4bn this year. They are expected to drop a further one per cent next year.

Price remains a key barrier as the company battles newcomers to the market and a generation of consumers reluctant to pay top price for brands such as Pampers.

Marketing, then, will come to the fore.

Taylor has only two years ‘marketing director’ experience under his belt, overseeing diaper products in the US for two years in 1996. His predecessor, by comparison, leant on almost eight. Global marketing and brand building officer, Marc Pritchard, will now report into Taylor. He’s been on a drive to consolidate agencies and save $500m annually in fees, a strategy likely to continue under Taylor if he’s to hit his 2018 targets.

The stock market welcomed the shakeup with shares rising 0.2 per cent on the announcement.

Procter & Gamble (P&G)

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