P&G Announces Growth Through Acquisition Strategy

09 January 2003

Future acquisitions will contribute at least 1% annually to Procter & Gamble’s total sales revenues, says Alan G Lafley, president/ceo of the globe’s largest advertiser.

In an interview with Paris business newspaper Les Echos, Lafley outlined his strategy to achieve yearly revenue growth of between 4% to 6% – although P&G is now shooting for underlying profits growth of ten per cent annually.

In addition to revenue contributions from newly acquired units, “we think about two per cent is market growth and we tried to be conservative,” says Lafley. “There is another 1 to 3 per cent that we call organic growth, and that is internally generated innovation.”

Since Lafley took the helm of the underperforming household products and toiletries giant two and half years back, P&G has to all intents re-engineered its brand portfolio, an exercise Lafley considers largely achieved in its fabric care, home care, baby care and feminine care businesses.

“I think the [portfolio] work is 90 per cent to 95 per cent done - the objective is now to extend our businesses around our core brands. Why not through acquisitions?” he asked.

Asked about P&G’s interest in acquiring German-based multinationals Wella (haircare) and Biersdorf (Nivea and other skincare brands), Lafley denied making an offer for the latter and was non-committal about the former, although conceding that his company needed to expand its haircare business, especially in Europe.

“I read that [German consumer brands group] Henkel apparently made an offer and it sounds like Wella said 'no'. We will have to see what they want to do.”

Data sourced from: Financial Times; additional content by WARC staff