P&G To Divest Major Brands To Hit $100 Billion Annual Revenue By 2010

Cincinnati, OH- Procter and Gamble (P&G), the world's largest consumer products company, is reviewing its 300 plus brand portfolio. Equity analysts and investors say P&G must rid itself of brands that aren't growing and invest in profitable brands to enable to company to hit its $100 billion annual revenue target by 2010.

Among the reported brands that are up for auction are coffee brand Folgers, Duracell batteries and potato snack Pringles. In recent years, P&G sold Jif peanut butter and Sunny Delight beverage to other companies.

"It's a growth rate issue, not an absolute product positioning issue. The ones they're selling aren't growing as fast as some other brands," Bret Parrish, principal and portfolio manager at Johnson Investment Counsel in Monfort Heights, told the Cincinnati Enquirer.

P&G's strategy is to hit its Chief Executive A.G. Leafley's $100 billion annual revenue goal by 2010.

Though Folgers lead in the U.S. homemade coffee market, a study by NPD Group, a New York consumer product research firm, revealed homemade breakfasts that included coffee dropped from 33 percent to 30 percent from 2000 to 2007, while restaurant breakfasts with coffee climbed from 37 percent to 39 percent.

Coffee chains such as Starbucks and Dunkin' Donuts, which has plans for 30 new locations in the Cincinnati area alone, are the real beneficiaries of the growth in coffee-drinking, reports the Enquirer.

Also, Folgers failed to penetrate markets such as Asia and Latin America, which are growing faster. Duracell and Pringles, on the other hand, are sold internationally.

NPD said Pringles faces profit issues similar to Folgers: "People are eating just as many potato chips, but a generation of young adults starting their own households is stocking pantries with brands that tout themselves as healthy choices."

To update its line of salty snacks, P&G launched new varieties such as Pringles Select gourmet label and Pringles Stix, which are baked and come in 90-calorie packs.

The Enquirer reports that analysts grade Duracell as "hard sell." The battery brand Procter bought from Gillette in 2005 has the fewest potential buyers.

"Duracell's going to be a harder sell for them. It's not certainly as appealing of a business, nor is there naturally as many strategic buyers as there are on the Pringles side," Parrish said.