Warc Blog

Consumer is boss, says new P&G chief

27 May 2013
CINCINNATI: Procter & Gamble, the FMCG group, has named AG Lafley as its chief executive for the second time, as the biggest advertiser in the US seeks to improve flagging performance levels.

The company, at present the largest consumer goods manufacturer by global sales, announced that Bob McDonald, its incumbent CEO, will "retire" in June, having assumed the role four years ago.

Lafley led the firm with great success between 2000 and 2009, and his return follows a period of sustained pressure on McDonald from investors like Bill Ackman, of hedge fund Pershing Square Capital Management.

"During the past year, much attention has been focused on me from several angles, which has been a distraction that is not in our best interests," McDonald wrote to P&G's staff. "It's time to change that dynamic."

In his own message to employees, Lafley outlined priorities including strengthening P&G's position in mature markets, continuing its progress in fast-growth economies and enhancing productivity.

"I want to assure you that we will build on the business momentum behind the current growth strategies," he said. "We create and build brands that improve consumers' lives.

"The consumer is boss - at the heart of everything we do," Lafley added, alongside stating that "Innovation is our lifeblood." P&G was perceived by analysts to have struggled in this area of late.

Jim Stengel, Procter & Gamble's global marketing officer when Lafley was chief executive, told the Financial Times: "AG has always been a champion of innovation, of marketing, of building brands consumers love."

Having seen P&G's market share fall in core categories like the US laundry sector, McDonald created a centralised team of marketers, R&D staff and other key executives to identify and rapidly roll out new products.

Even though the maker of Tide and Pampers has enjoyed four successive quarters of rising profits, investors and industry observers were still not convinced. Further challenges, however, remain.

"Any near-term jubilation may be tempered by downstream realities, including the potential of another reset year," said Ali Dibadj, an analyst at Bernstein Research, CNBC reported.

Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management, also questioned where the next generation of talent would emerge from.

"This company has groomed so many top executives that it's hard to understand why they're in this spot," he told Bloomberg.

Data sourced from Cincinnati.com, Financial Times, CNBC, Bloomberg; additional content by Warc staff

 
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