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Clean and clear

Powerhouse FMCG players, Proctor and Gamble, strive to maintain that powder white image, and high sales figures

by Michael Karam

Mohammed Samir, the Egyptian head of P&G (Proctor and Gamble) Levant is sitting in the conference room of P&G’s offices in the prestigious Atrium building in the BCD. Next to him, above to his right is a massive bag of Ariel. On his left is Monica Mogabgab, P&G’s communications officer. P&G has built up a whiter than white corporate image and, rather like its detergents, they want to keep it that way.

In fact, Samir is talking about soap powder. “The ingredients of household washing power varies globally from region to region, depending on local habits,” he explains. “In the Middle East there is less demand for an ingredient that removes red wine, but it may include other ingredients that help erase stains from the specific oils and fats we eat.” And the trivia doesn’t stop there. Feminine products – sanitary towels, tampons and the like – are also packaged to dovetail with local sensibilities, while, the fact that Arabs have different hair to Europeans is also reflected in the basic ingredients of locally-sold shampoos. Such is the world of fast moving consumer goods and it is one that P&G bestrides like a colossus.

For the benefit of those who have been living on Mars, P&G has been making baby, health, family and beauty products since 1838. It has a stable of 300 brands, which its sells to 5 billion consumers worldwide in more than 160 countries. It has global sales of $45 billion (three times Lebanon’s GDP) and manufactures 14 brands that generate revenues of over $1 billion each. P&G products – which nowadays include Ariel, Pantene, Herbal Essence, Always, Head & Shoulders, Crest, Pringles and Yes – have been on the Lebanese shelves since 1946, but it is only in the last two years that Beirut has been designated P&G’s regional headquarters for Levant, serving Lebanon, Syria, Jordan, Cyprus and Iraq. Locally, P&G claims a 10% market share of the $500 million consumer goods market and, as a result of its presence on the ground, has experienced what Samir calls “double digit” growth. “These figures justify our move from Switzerland,” he claims, adding that like all good multinationals, P&G has been robust in communicating it’s corporate message through the community by a series of health education programs.

In fact sustainable development has been the cornerstone of P&G’s international corporate image. P&G’s Pampers and the South African government are spearheading a campaign to fight maternal mortality in childbirth; Secret, a P&G deodorant for women, is lending its name to an initiative that helps American teen girls develop their self esteem, while Dash, the popular Italian detergent, has been supporting rural communities in Kenya for 15 years.

While all this may be very noble, the sharp end of the FMCG market is ruthlessly competitive. Samir, who says he “enjoys a good fight,” can proudly claim that P&G products are leaders in every category they compete in. “This is a fun market,” he enthuses. “We are up against all the big global brands, Unilever, Colgate Palmolive, L’Oreal and Henkel as well as the local brands, which are also pretty strong performers and cannot be discounted.” Although Lebanon is third in overall sales behind Iraq and Syria, its per capita spend is only bettered by Cyprus. “The Lebanese consumer is very demanding and incredibly price-conscious,” he explains.

Had P&G been able to respond to the arrival of the supermarket brands? “We pride ourselves on being able to respond to our consumer needs and we offer our customers a range of products for a range of budgets that are all underscored by our quality threshold,” says Samir, a P&G man since leaving university. P&G products vary in price (net of taxes) from country to country. Given the price sensitive nature of the local market, it would appear P&G’s competitive options are either to take a cut on margins to ensure a presence in every household, or be seen as a quality product ensuring strong brand equity. Samir outlines the pricing priorities, keeping his cards very much close to the corporate chest: “We must satisfy consumer needs in the best possible way,” he explains. “To do that we build a strong relation between the brand and the consumer to ensure that we are offering to the consumer the best value.”

One of the difficulties in having so many brands is that often the multinational is hidden. A consumer may be convinced by the P&G corporate ethos or a particular brand but may unknowingly buy detergent from P&G, toothpaste from Henkel and shampoo from Unilever. Can a multinational seriously command loyalty when it is hidden behind such strong brands? “We are a company of brands. We talk to our customer through those brands,” says Samir, employing a level of obfuscation normally found at a White House press briefing.

Regionally, Iraq represents P&G’s biggest market, but the situation on the ground means that P&G has not yet been able to fully exploit the post-war opportunities. “We have expansion plans for Iraq as well, which will rely heavily on the security and stability in Iraq in the coming few months,” Samir says. “As a Company, we strive to have leadership shares in the categories we compete in especially the core ones.”

Samir added that he hoped to achieve the same in Syria. “Our brands are already present [in Syria] and we look forward to launch more categories and brands there.”

Locally, he cannot envisage any time soon when P&G will appoint what it calls contract manufacturers for their goods. “We have done this in Syria and Egypt,” he says, “but it depends on two factors: the size of the market and/or the level of government incentive offered to us in order to take such a step. As we speak, neither of those criteria has been met.” As the conversation turns to environmental issues, Samir’s eyes light up. Ever the company man, he is quick to point out P&G’s gleaming record, even in developing countries. “We have our own rule book so even if the country in which we are operating has a poor environmental record or does not enforce international regulations, we will produce goods that have a benchmark.”

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Michael Karam

Michael Karam is the author of Wines of Lebanon.

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