How Procter & Gamble Decided to Have Fewer Brands

Through 2014, Procter & Gamble was one of the largest consumer-products companies in the world by both revenue and brand portfolio. The company owned approximately 80 brands across categories including household cleaning, personal care, beauty, oral health, baby care, fabric care, and food. Some of these brands were category leaders globally (Tide, Pampers, Gillette, Pantene, Olay). Others were smaller regional players acquired over decades of bolt-on acquisitions.

In 2014, then-CEO A.G. Lafley announced a strategic decision that would have been considered unusual for a company of P&G's scale: the company would divest or discontinue approximately 100 brands and focus on its top 21 "flagship" brands, which collectively represented roughly 90 percent of revenue and 95 percent of profit. The decision was contrary to consumer-products industry orthodoxy, which had emphasized brand portfolio diversification for decades. It worked.

The Divestitures. Between 2015 and 2019, P&G executed an aggressive divestiture program. The Coty 12.5 billion dollar transaction (2016) sold over 40 P&G beauty brands — including Wella, Clairol, Max Factor, and Cover Girl. The Duracell business was sold to Berkshire Hathaway. Dozens of smaller brands were sold to private-equity buyers or strategic acquirers. The cumulative divestiture proceeds exceeded 14 billion dollars.

The remaining flagship brands — Tide, Pampers, Bounty, Charmin, Gillette, Crest, Pantene, Head & Shoulders, Olay, SK-II, Vicks, Pampers, Always, Dawn, Cascade, Febreze, Mr. Clean, Swiffer, and a handful of others — received increased marketing investment, R&D resources, and management attention. The simplified portfolio allowed P&G to operate with greater focus and execution discipline.

The Financial Results. The strategic simplification produced visible improvements in financial performance. Operating margin expanded from approximately 19 percent in 2014 to over 22 percent by 2020. Same-brand revenue growth accelerated. The company's stock compounded at roughly 12 percent annually from 2015 to 2024, ahead of S&P 500 performance.

The flagship-brand discipline was not without controversy. Some discontinued brands had been profitable contributors. Some divested brands subsequently performed well under new ownership. Coty, the buyer of P&G's beauty brands, struggled for years to integrate the acquired portfolio and ultimately had to write down several billion dollars of goodwill. P&G's strategic gain came partly at the expense of buyer execution.

The Underlying Logic. What drove the strategic shift was the recognition that brand-level marketing investment had been spreading too thin across too many brands. Each individual brand needed scale-marketing investment to remain culturally relevant. With 80 brands, P&G could not adequately fund all of them. With 21, it could. The cost reductions from eliminating brand-level marketing on smaller brands were redirected into increased marketing on the remaining flagships.

This concentration produced more durable brand equity in the remaining portfolio. Tide and Pampers, in particular, have benefited from sustained marketing investment that smaller competitors cannot match. The result has been gradual share gains in core categories while smaller competitors struggle to maintain shelf space.

The Industry-Wide Pattern. P&G's approach has been increasingly emulated across consumer-products. Unilever has executed similar brand-portfolio rationalization, divesting weaker brands and concentrating on flagship products. Nestlé has done equivalent work in food. Colgate-Palmolive has followed a similar pattern. The consumer-products industry as a whole has been moving toward more concentrated brand portfolios.

The reason is partly the maturation of consumer-products as an industry. Growth has slowed. Brand-extension opportunities have largely been exhausted. The remaining growth is in operational excellence and brand-level marketing intensity. Companies with too many brands have been disadvantaged in this environment.

The Larger Lesson. What P&G demonstrates is that strategic discipline often requires choosing what not to do. Most companies struggle with the divestiture decision because each individual brand has stakeholders — managers, employees, suppliers, retailers, customers — who advocate for its continued existence. The CEO who can make the divestiture decision and execute it through years of complex integration is rare.

For investors, the P&G case is one of the cleaner examples of how operational simplification can produce financial returns. The company is no more "innovative" than it was in 2014, but it is operationally simpler, more focused, and more profitable. The strategic clarity has compounded into shareholder returns.

For strategists, the takeaway is that the question "what should we add?" is often less important than "what should we eliminate?" Most companies have categories, brands, products, and businesses that distract from their core strengths. The discipline to recognize and divest these is often the most valuable strategic decision a CEO can make.

Now go enjoy your Saturday. Probably with at least one P&G product nearby.

Sources:
- Procter & Gamble Company 10-K filings (FY 2014-2024)
- A.G. Lafley public statements on brand portfolio strategy
- Industry coverage: Wall Street Journal, Bloomberg, Advertising Age
- Coty Inc. integration disclosures