Published on : Mar 17, 2015
The potential split of some of Procter & Gamble Co.’s beauty brand and their becoming a separate company shows the struggle that the world’s largest consumer goods manufacturer is facing in trying to master the beauty-products industry, a heavily fragmented and fast moving global industry.
People with detailed knowledge about the matter said that Procter & Gamble is working with advisers to devise a plan for either selling or spinning off some brands from its beauty products categories. The company has not yet finalized on the details and may also decide not to take the route of separation.
The mere fact that a company Procter & Gamble is even considering any such plans shows the difficulties posed by the cosmetic industry, with the numerous competitors and rapidly changing trends, to a company that is used to sell detergents and diapers.
While P&G has moved its focus on the expansion of skin care brands such as Olay towards new markets and audiences, traditional competitors such as L’Oreal SA of the beauty industry have hold of the younger-age consumer group.
Selling or spinning off some of the beauty products related brands will speed up Procter & Gamble Chief Executive Officer A.G. Lafley’s idea of exiting the company from as many as 100 money losing or slow grossing brands. Lafley has plans to complete all the separations by July this year, allowing the company to concentrate more on its remaining popular brands.
Usually, beauty brands that target consumers of similar ethnicities and age groups shop within narrow price ranges and on Beauty brands succeed when they are targeted at consumers of similar ages and particular sales platform. Thus, Procter & Gamble has tried to gain customer base of younger people by bringing the Fresh Effect product line in Olay, a brand that is still considered for mature women.