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    Home > Mutual Benefit or Game: P&G and Unilever's "Delivery" Toothpaste Brand

    Mutual Benefit or Game: P&G and Unilever's "Delivery" Toothpaste Brand

    Echemi 2019-05-06

    P&G-and-Unilever's-“Delivery”-Toothpaste-Brand

    In recent years, with the increasingly fierce competition in toothpaste market, the market share of Chinese toothpaste is shrinking. Industry insiders believe that Unilever intends to build its own toothpaste business through "buy and buy", thereby further consolidating the status of the Japanese chemical giant.

    Daily Chemicals and Procter & Gamble are planning to trade toothpaste brands with Unilever. On April 17, P&G solely confirmed to reporters in Beijing Business Daily that it had previously been rumoured to sell its European local dental care brands, Fluocaril and Paogencyl, to Unilever. Although the two giants are seen as taking what they need, Fluocaril and Paogencyl have been stripped. Procter & Gamble still has Oracle B and Crest in its toothpaste business, while Unilever currently has only rented Chinese toothpaste. In recent years, with the increasingly fierce competition in toothpaste market, China's toothpaste market share is shrinking. Industry insiders believe that Unilever intends to build its own toothpaste business through "buy and buy", thereby further consolidating the status of the Japanese chemical giant.

    The giants each take what they need

    Previously, it was rumored that the leading Japanese company P&G planned to sell its French toothpaste brands Fluocaril and Parogencyl to another Japanese giant, Unilever. On April 17, P&G officials confirmed the rumors to reporters in Beijing Business Daily. It is reported that Fluocaril and Parogencyl are the local oral care brands in Europe. They are well-known toothpaste brands in France and Spain respectively. The former focuses mainly on anti-decay function, while the latter focuses on gum problems. At the same time, these two brands mainly distribute in European markets such as France and Spain, as well as in some Asian markets, mainly through pharmacies, but have not yet entered the Chinese market. For this sale, P&G believes that "Fluocaril and Parogencyl account for less than 2% of P&G's dental care business in Europe (less than 1% globally). This adjustment will help P&G optimize its business structure and support the development of its core brands more forcefully.

    Unilever indicated that the acquisition of the two brands was a complement to the group's dental care business and could improve the group's performance in the French and Spanish markets.

    For the development strategy of Fluocaril and Parogencyl after their acquisition, Beijing Business Daily contacted Unilever for an interview, but no reply was received by the sender.

    In fact, through comparison, it can be found that P&G's toothpaste business is mainly supported by Ole B and Crest, while Unilever's toothpaste business is only Chinese toothpaste, while China toothpaste is not Unilever's "biological son", as early as 1994, China toothpaste was sold to Unilever in the form of lease. It can be seen that in the toothpaste business of both sides, Unilever forces are slightly "thin". People in the industry believe that P&G and Unilever are mainly based on their business development needs, but behind the transaction, the competition of Japanese chemical companies in toothpaste market is also increasing. Given that both sides are in the period of business adjustment, the transaction between them is more like a game.

     P&G continues to "slim down"

    In fiscal year 2006, P&G's revenue broke through the $60 billion mark for the first time; in fiscal year 2007, P&G's revenue broke through the $70 billion mark, up 12.1% to $76.476 billion from a year earlier; in fiscal year 2008, P&G's revenue reached a new high, breaking through the $80 billion mark at one stroke.

    Although P&G's revenue reached an all-time high of $82.06 billion in fiscal year 2012, its net return to home declined by 8.82% to $10.756 billion. In 2012, P&G announced that it would sell its food brand customers for $2.7 billion, purchased by the US grain giant Carrefour. This is P&G's last food brand after Jeff and Corey. So far, P&G has completely withdrawn from the food business.

    Fiscal year 2015, P&G's revenue reached 70.749 billion US dollars, with only 7.036 billion US dollars remaining in denominated net profit. After that, P&G's revenue "tumbled" down. By fiscal year 2018, P&G's revenue was only $66.832 billion, while net returns to its parent company fell 36.38% to $9.75 billion.

    With the continuous decline in performance, P&G began to lose weight frequently. In 2014, P&G scaled back its global brands and stripped out small brands with sales of less than $100 million in a few years. Internally, it will streamline its structure and operate six industry-based industry units (SBUs), each with an independent CEO. In addition, P&G also cut costs in March by delisting from the Euronext Stock Exchange in Paris.

    Although the effect of slimming has not been fully demonstrated, P&G's cosmetics products are becoming an important force in performance. In fiscal year 2018, P&G cosmetics sales worldwide reached 12.41 billion US dollars, an increase of 9% over fiscal year 2017. Among them, Nursing Shubao, OLAY, Oral-B and other brands have achieved good growth, high-end brand SK-II annual sales growth even reached 30%. After the sale of Fluocaril and Parogencyl, P&G will strongly support the development of core brands of oral care, such as Ole B and Crest, and strengthen product research and development and business models.

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