The Procter & Gamble Company, or P&G (PG), is a multibillion dollar FMCG (fast-moving consumer goods) entity. Its highest-grossing Fabric Care and Home Care segment includes fabric enhancers, laundry detergents, air care, dish care, professional products, and surface care.
The segment’s annual revenue was reported to be $26.1 billion in fiscal 2014. It contributed 31.7% of the company’s total net sales. P&G’s brands in this segment usually command first or second position in the markets they compete in. The company’s international market share in Fabric Care is over 25%.
The above graph shows the average price of P&G’s Fabric Care and Home Care products, expressed as $0.19 per load. In comparison, the average product price among its competitors is $0.13 per load.
Billion dollar brands
P&G’s Ariel, Dawn, Downy, Gain, and Tide brands compete with Unilever’s (UL) laundry detergent ALL and other local fabric care brands, depending on the market. In the US, P&G’s Tide laundry brand has ~40% of the market share. P&G laundry products overall have a ~60% market share in the US.
Compared with fiscal 2013, the segment’s net sales increased by 1% to $26.1 billion. Net income came in at $3 billion. The segment’s contribution toward net income decreased to 25.9% in fiscal 2014, from 26.8% the previous year. Organic sales as well as volume increased slightly in both developed and developing regions.
Duracell’s divestiture and future outlook
In November 2014, the company announced its plan to divest its batteries business. The Duracell brand historically reported results under the Fabric Care and Home Care segment. P&G’s divestiture of its Duracell brand via a split transaction with Berkshire Hathaway (BRK-B) will be completed in the second half of calendar 2015, depending on the necessary regulatory approvals. Learn more about divestitures in Part 18 of this series.
P&G plans to use innovation to strengthen products like Tide, Gain, and Ariel. For example, the Tide PODS and Gain Flings variants of Tide and Gain have more than 10% of the US laundry segment value share and over 80% of the unit dose market.
Investing in P&G
The Consumer Staples Select Sector SPDR ETF (XLP) assigns 12.3% of its portfolio weight to P&G. Colgate-Palmolive (CL) and Kimberly-Clark (KMB) make up 3.3% and 2.4% of XLP, respectively. The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) each assign 1.2%[1. All figures for the ETF portfolio weights are as of June 27, 2015] of their portfolio weights to P&G.