P&G's Asian chief: Growth is speeding up

AP News
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Posted: Apr 08, 2011 12:27 PM
P&G's Asian chief: Growth is speeding up

The head of Asian operations for the world's largest consumer products maker says Procter & Gamble Co.'s growth in the region with half the world's population is picking up speed.

The goal: More babies in Chinese villages wearing Pampers. More women in teeming urban India washing their hair with Pantene. More families on the canals of Vietnam cleaning their clothes with Tide.

The kind of numbers in play _ and the potential for building on them _ are why Procter & Gamble Co. has staked its future deeply in Asia.

"The Asia business in general is extremely healthy right now," Deb Henretta, Asia Group president for P&G, told The Associated Press in a recent interview. "We have accelerated our growth fairly significantly over the last couple years."

P&G's global targets of reaching 5 billion consumers by 2015 (from 4.2 billion) and more than doubling total annual sales to $175 billion over 15 years rely heavily on high growth rates in China, India, and the rest of the region.

Henretta, based in Singapore, was at Cincinnati headquarters last month for meetings. P&G has consolidated its three Asia branches into one group, including Japan, most of the Asian continent, and Australia and New Zealand. Her group already serves 2 billion consumers. In fiscal 2010, Asia accounted for 15 percent of P&G's $79 billion in revenue, up from 13 percent in 2008.

P&G sees that as just a start.

Henretta's mission: get Asian consumers buying P&G products at the same rate as people in Mexico. Asia's per capita spending on P&G products is $3.46 _ China at $3 and India at some 70 cents per person. Getting her region to Mexico's $20 per person would jump P&G's some $12 billion in annual Asia revenue by $50 billion.

"The fact that Mexico's done it makes it eminently achievable in my mind, and I tell our folks that all the time," Henretta said. "So we're definitely focused on getting there, and we'd like to get there as fast as possible."

P&G's Asia efforts generally play off the company strategy set by CEO Bob McDonald _ reach more places with expanded distribution, attract more people at all income levels with products geared to their spending ability, and entice existing customers to trade up and try more kinds of P&G products.

Henretta said the world's largest consumer products company wants to use its size, but tailors Asian plans for the region's diversity in cultures, stages of economic development, and incomes from billionaires to people living on less than a dollar a day.

"I don't believe you can win in Asia by simply taking Western mindset and Western business models and plopping them into Asia," she explained. "We've taken on a bit of a rallying cry _ being as common as possible, but as different as needed.

"We want to be as common as possible so we can leverage corporate scale, but we want to be as different as needed, so we can make sure that what we put into Asia will work with Asians."

To reach low-income Asians, P&G has rolled out a pennies-priced version of Gillette shavers, and low-priced Tide laundry detergent and single-rinse Downy fabric softener that saves water, a scarce resource in some areas.

Meanwhile, P&G also offers high-end SK-II and Olay cosmetics and advanced shampoos geared to regional hair types and preferences, such as Pantene with coconut oil.

P&G has invested in research centers in China, India, Japan and Singapore, besides manufacturing plants around the region.

Scott Anthony, who works in Singapore as managing director of Innosight Ventures, sees P&G making sound moves.

"What they are really trying hard to avoid is the trend that has just hamstrung multinational companies over the years, which is stripping things down and just lowering prices and trying to reach consumers cheaply in the emerging markets," Anthony said.

Anthony said noticeable physical investments by companies such as P&G, General Electric Co. and Cisco Systems Inc. are "recognizing that winning in emerging markets requires living in emerging markets. This isn't just the big, bad American company that is coming to plunder _ people are really interested in helping the country develop and grow."

Anthony said P&G's success at reaching the growth it wants will depend on the region's economies continuing to grow as they have in recent years.

"You can't control how much does the GDP increase, how quickly do people enter the middle class; you can't do much about that," he said.

The Japanese earthquake and tsunami added another unforeseen impact; P&G is still assessing effects on its second-largest Asian business behind China.

P&G also faces tough competition such as Unilever PLC, the European consumer products company that got a head start in India; regional powers such as Japan's Kao and Unicharm; and proliferating local companies. Henretta said P&G's moves take into account all three levels of competitors.

Henretta, 49, is a Rochester, N.Y., native who formerly headed P&G's Global Baby Care business, promotes health and child development benefits of disposable diapers, beyond convenience. In the past decade, the Chinese diaper market grew tenfold, from $220 million to $2.2 billion, P&G says.

"Obviously, it is a big focus for us because Asia is having more babies than many regions of the world," she said. "So, we've got a lot of babies we'd like to see in Pampers."