STRATEGIC MANAGEMENT

P&Gs Acquisition of Gillette

Roll
Number

Name

Email Address

Contact

PGP/19/24
6

Anisha Goyal

anishag19@iimk.ac.in

+91-858-698-2005

PGP/19/28
1

Raghavan S

raghavans19@iimk.ac.i
n

+91-735-649-4601

PGP/19/28
7

Shashank Monappa

shashankm19@iimk.ac.i +91-948-007-5710
n

PGP/19/28

Sudhina Abraham

sudhinaa19@iimk.ac.in

+91-819-778-8833

1/19/16

Session: 4
Date: 15-01-2015
Group: 5

Product portfolio of P&G

and Gillette were almost
mutually exclusive and the
acquisition was in-line with
global strategy of related
expansion
Acquisition helped P&G to
expand its product portfolio
and cater to varied needs
of more customers
Post acquisition, P&G had
21 billion dollar brands
Acquisition strengthened
the portfolio in personal
care category by 50%

Objectives of the
Acquisition

Portfolio
expansion

Increased
bargaining
power with
large
retailers

Large retailers accounted

for a major part of
consumer goods sales
Acquisition helped P&G to
bargain with major retailers
like Walmart over prices
and product placement

Increased scale
to lower costs

Objectiv
es

Leverage
each others
strengths

Enter
new
markets

Gillette had a strong hold in emerging

markets like India and Brazil
P&G could improve its share in
geographies where Unilever had
outperformed P&G through Gillette
Post acquisition, P&Gs earnings increased
by 35% in India

Cost savings were

expected from purchasing,
manufacturing, logistics
and administrative costs
Cost saving from layoffs of
around 4%
Post acquisition savings
accounted for $10-11
billion through cost
synergies

P&G could enter in mens

grooming segment through
Gillettes existing market
and customers
P&G realized sales of 5
billion dollars in new
categories post acquisition

 Y-o-Y growth mens grooming

industry shows tremendous growth
in years 2000-2007.

Gillette 2000-04
Gillettes sales were soaring and had increased 19%
in 2004

The growth is now ~2% down from

~10%.

Net income for the year climbed 22 percent to

$1.69 billion from the prior year's $1.39 billion,
fuelled by the robust operating results

Blades and Razors net sales for the year rose 12%,
Duracell net sales for the year rose 11%, Oral Care
net sales for the year climbed 20% andBraun net
sales for the year increased 16% in 2004

4 key innovations led to Mach3 Turbo in 2003

Gillette 2014-15
Lack of innovation and foresight led to online razor
sales cut into Gillette shares

Overall razor and blade saleshave been declining in

recent years, sales in the U.S. fell to $2.96 billion in
2014 from $3.08 billion in 2012

Sales in male grooming were flat, and sales of

beauty products were down 15.5%

Procter & Gamble saw all of its categories post a

double-digit drop in sales for the first quarter fiscal
year 2016;Beauty and Grooming were the biggest
offenders

Euromonitor

Analysis of Grooming Industry

Analysis of Grooming Industry

P&G (excl. of Gillette)

P&G India

P&G(excl. of Gillette)

P&G displays an increasing trend for net sales

across the years till 2008
The % growth in net sales in 2005 at the time of
acquisition was 10.37%
Growth in sales displays a largely flat trajectory till
2008
P & Gs plans to utilise Gillettes distribution
network in India and Brazil did not deliver any

P&G India saw a sharp downturn in sales in 2005-07 (post

merger)
This could be attributed to the differences in distribution
structures of P&G and Gillette in India, Gillette adopted P&Gs
pull model instead of its existing push model
Sales recovered in 2006-07 to reach the pre-acquisition levels
and saw a steady growth from then on.
Sales growth rate however does not display any significant
increase post acquisition
This indicates the lack of any extraordinary advantage to P&G

www.annualreport.pg.c
om/

1/19/16

P&G India

Current Scenario

Gillette is Procter & Gambles leading beauty and personal care brand and the worlds
number three beauty and personal care label.

It is one of the companys billion dollar brands, with sales of US$11.6 billion in 2011.

Gillette is among Procter & Gambles most diverse brands in terms of geographic profile.

It ranked number one in every regional mens grooming market in 2011.

Google Finance 2016

Google
http://www.bloomberg.com

was stable in
2005
HUL has
always overperformed
In 2008-09
recession,
P&G faired
poorly in
comparison
to
competitors
recovered
but not
overtaken
any
competitor
Major cause
is not
enough RE
from
acquisition of
Gillette to
tide over the
global

P&G strongholds
Gillette competency
http://www.inc.com/anna-hensel/why-online-razorbladesales-are-booming.html

Company Analysis

1/19/16

7
Introduction

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