Proctor and Gamble 2006 Annual Report Download - page 7

The Procter &Gamble Company and Subsidiaries 5
Growth
P&G’s portfolio of billion-dollar brands has
grown sales 8%(9) per year. We’ve increased
sales nearly 9%(10) peryearinour16largest
geographic markets. And we have grown
share with P&G’s top retail customers. We’ve
leveraged P&G strengths and technologies in
every core business.
Growth Opportunity
P&G is the global leader in Baby Care,
Feminine Care, and Fabric Care, with 32% to
36% global shares in these major categories.
In our strongest large markets, however,
we have shares that exceed 50%—and the
Gillette Blades and Razors business is still
growing with global shares in excess of 70%.
We’re well positioned to capture more of this
growth opportunity.
Growth
P&G has more than doubled sales in faster-
growing, higher-margin categories such
as beauty, health care, and home care.
More than 70% of the Company’s growth,
or roughly $20 billion in net sales, has
come from organic growth and strategic
acquisitions in these businesses. Well over
half of P&G sales now comes from these
faster-growing, higher-margin businesses.
Growth Opportunity
We compete in beauty and health care
categories that represent more than a
$350 billion global market, growing 5% a
year on average. P&G has less than a 10%
share of this combined market. There is no
doubtthatBeautyandHealthCarewill
continue to drive disproportionate growth
for P&Gthroughtheendofthedecade.
Growth
We have increased sales in developing markets
16% per year over the past five years and
have achieved after-tax margins comparable
to developed markets. Nearly a third of total-
company sales growth since the beginning of
the decade has come from developing markets.
Growth Opportunity
In the categories in which P&Gcompetes,
developing countries represent a $200 billion
market and is expected to approach $250
billion by 2010. We currently compete in only
about 10 of P&G’s top 25 categories in most
developing countries. There is more than $20
billion of growth opportunity over the next
several years through expansion of P&G’s
category presence and increased share growth.
Fast-growth
high-margin
businesses
P&G Growth Strategies
Core
businesses
Developing
markets
CORE STRENGTHS
P&G’s core strengths are in the competencies that matter most in
the consumer products industry:
• Shopper and consumer understanding
• Branding
• Innovation
• Go-to-market capability
• Global scale
Our ability to combine these strengths creates significant and
sustainable competitive advantage.
Consumer and shopper understanding is the foundation.
P&G interacts with more than four million consumers a year in
nearly 60 countries. We conduct more than 10,000 research
studies each year, and invest more than $200 million per year in
consumer and market understanding. Our research spans more
than 25 product categories, providing a more complete
understanding of consumers than companies focused more
narrowly on a few categories. We see innovation opportunities
that others do not see.
Once we know where the opportunities are, we bring
tremendous innovative resources to the task. In addition to
P&G’s product-category breadth, we have deep technical expertise
in a diverse mix of technologies from enzymes to fragrances to
surfactants to substrates. As a result, we have access to more internal
technologies than any other consumer products company. We
multiply this internal innovation capability by reaching outside P&G
to a global network of nearly two million researchers in technology
areas connected to P&G businesses. This “connect and develop”
collaboration results in a bigger and stronger innovation pipeline.
P&G’s brand-building strength and go-to-market capability
enable us to commercialize a larger innovation pipeline.
P&G’s leading global brands are platforms for innovation. We can
bring new products to market on brands that already have strong
equities and deep consumer trust; this increases consumer trial and
retail customer support. P&Ghasalsobeenacourageousleaderby
creating new categories with new brands such as Febreze, Swiffer,
Kandoo, Prilosec OTC, and ThermaCare. For both new and existing
brands, we leverage P&G’s strong customer partnerships and local
market knowledge to maximize consumer trial and the ultimate
commercial success of new initiatives.
(9) Excludes the initial-year impact of adding newly acquired billion-dollar brands to the portfolio.
(10) Excludes Gillette.