Proctor and Gamble 2003 Annual Report Download - page 19

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In Snacks and Beverages, the goal is to build our focused
brands and provide strong, sustained cash flow. Behind the
strength of two billion-dollar brands – Folgers and Pringles –
rigorous cost discipline and a strong innovation program,
we’re positioned to deliver.
We have faced a number of challenges over the past
three years, but we have responded to them squarely.
Recognizing the need to deliver growth, we have
streamlined our Snacks and Beverages portfolio. Last year,
we spun off the Jif and Crisco brands, and we recently
announced that we’re exploring strategic options for the
juice business.
We’re now sharply focused on salted snacks and coffee.
These are the categories in which P&G can leverage
leadership to deliver value to consumers, customers and
shareholders. Folgers is the #1 coffee brand in North
America. It has strong retailer support and deep consumer
loyalty. Pringles – P&G’s most global franchise – is one of
the leading salted snack brands, sold in over 140 countries.
Three strategies will drive the growth of these big brands:
Innovation. P&G brings significant innovation scale to this
business. Because of the breadth of P&G businesses, our
brands can access a broader portfolio of relevant product
and packaging technologies – inside and outside P&G –
than many competitors. For example, we recently
introduced the new plastic AromaSeal™ Canister on
Folgers in the U.S., leveraging both technology and supplier
partnerships from elsewhere in the Company. This new
package – a category first – is easier to carry and provides
fresh aroma and taste day after day. Pringles’ innovations
include Snack Stacks (a 23-gram lunchbox size) and
customized solutions for retailers: unique colors, flavors
and sizes.
Enhanced Go To Market Capability. Our goal is for
Folgers and Pringles to be available to consumers whenever
and wherever they shop. To do this, we’re developing stronger
go to market capability. We’re combining the scale and
leverage of P&G’s Market Development Organizations
with external distribution and merchandising partners. New
distribution alliances with Meiji in Japan and Arnott’s
Snackfoods in Australia are expanding Pringles’ presence in
immediate consumption channels.
Cost Discipline. We continue to focus on improving the
financial strength of Snacks and Beverages. P&G Coffee
margins are among the best-in-class. While we’ve improved
over the past four years, P&G Snacks margins remain below
best-in-class. We intend to close this gap by focusing on more
efficient asset utilization and ongoing cost reduction.
We want to acknowledge the heroic achievements of P&G
employees, both active and retired, during this past year.
The Pringles plant in Jackson, Tennessee was struck by a
devastating tornado in May. Homes and businesses near the
plant were destroyed and virtually every tree surrounding
the plant was snapped in two. Fortunately, none of our
employees was injured. Once safety had been assured, these
unsung heroes mounted an extraordinary effort to get the
plant back up and running. They worked in 24-hour shifts
and, remarkably, in only two weeks, plant lines had started
producing again. The Jackson plant story is a profile in P&G
courage and dedication.
The Snacks and Beverages business is more focused today than
ever. We have hard work ahead of us. We must respond to
aggressive competitive coffee discounting and merchandising
with better consumer value and category-leading innovation.
We must continue to improve margins in Snacks, while
sustaining the pace of consumer innovation and retailer
customization. These are significant challenges, but I’m
convinced we have the brands, strategies and organization
to meet them head-on.
We’re providing sustained cash flow with
rigorous cost discipline and a strong
innovation program supporting Folgers
and Pringles, our two billion-dollar brands.
Jorge P. Montoya
President