Procter and Gamble at Deutsche Bank Conference Notes

Jon Moeller – Chief Financial Officer

Restructuring will focus on 10 core business units

“Going forward, we are anchoring our portfolio on 10 category-based business units and 65 brands. These are categories where P&G has leading market positions and where product technologies deliver performance differences that matter to consumers. These 10 businesses have historically grown faster with higher margins than the balance of the company. We are moving away from businesses that are more trend-driven, where fashion, fragrance and flavor drive consumer preference. We are staying in businesses where the product and its performance is the hero, where there are clear consumer jobs to be done and clear objective measures of performance. The products that consumers – these are products that consumers use on a daily basis and they are in structurally attractive categories.”

4 largest are baby care, fabric care, hair care and grooming

‘We expect to make progress in all 10 product categories, but we are putting a specific emphasis against the four largest categories: Baby Care, Fabric Care, Hair Care and Grooming and the two largest markets, the U.S. and China. Combined, these four categories and two countries represent over 80% of sales and profit.”

We are increasing sampling, a key point of entry and change for consumerst

“We are increasing sampling in new washing machines, a key point of category entry and change for consumers. Last year, we distributed 5 million samples in washing machines globally. This fiscal year, we will distribute about 17 million, and calendar year 2016, we will distribute 30 million samples of our best performing products.”

Transforming organization and culture

“Importantly, we are transforming our organization and culture. We are making many changes that by themselves may seem small and obvious, but together, they are significant and important. As an example, we have made several important changes in how we go to market. We eliminated overlapping resources and duplicative structures and responsibilities of marketing and sales professionals in the global business units and market developing organizations, clarifying responsibilities and strengthening accountability.”

Online shares slightly higher than offline because online skews more premium

“e-commerce point broadly – on an aggregate global basis, our online shares are slightly ahead of our offline shares, which is a good starting place. I don’t get too excited about that, because the demographics of the online shopper currently skews more premium in our portfolios, more premium, so it should be the case, but we have a slightly higher share which we do. ”

China moved to premium products very quickly

“China, there were really three things that happened. One was a rapid premiumization of the market. So, I lived and worked in China in the mid-90s and probably 2% of the category was transacted at premium or super premium priced tiers. Today, that’s over 50%. It’s one of the most premium markets in the world. Those two price tiers that represent more than 50% of consumption in the market are growing at double-digit rates. The balance of the market is flat to declining.”

Price became a proxy for quality in China

” I think although this is a bit of a hypothesis by significant quality contamination issues that occurred particularly in the food chain and in the beverage chain, the infant formula issues, the milk [ph] issues, etcetera. And understandably, Chinese families responded by looking for the highest quality products they could find. And in many cases, price became a proxy for quality, rightly or wrongly. So, that drove this change very, very quickly.”