Please ensure Javascript is enabled for purposes of website accessibility

The Procter & Gamble Company's Best Product in 2015

By Demitri Kalogeropoulos – Dec 27, 2015 at 7:21AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In an overall down year for the consumer-products giant, this brand stood out as a big winner.

Procter & Gamble (PG 2.04%) has an incredible portfolio of consumer-product franchises. In fact, the company owns 21 brands that each pull in more than $1 billion of revenue every year, and 11 that sit just below that impressive sales mark.

Source: P&G investor presentation.

To stay ahead of competitors in all of these leading product categories, P&G has to constantly innovate. That's the process that recently yielded hits like the Swiffer duster, Febreze fabric spray, and Crest whitening strips.

But it's the tweaks in existing brands, not innovations that create entirely new categories, that made the difference for P&G in 2015. These changes helped the consumer-goods giant refresh its brands against competitive attacks, contributing to market share gains and profitability boosts in an overall down year.

Runner up: Tide
The Tide brand, P&G's second-biggest franchise, clearly belongs on the list. Modifications in the detergent line included a formula for high-efficiency washers that minimizes the creation of suds, thereby cutting cycle time and water usage. Meanwhile, the Simply Clean and Fresh line helped P&G gain share at the value-end of the market. The company now offers a full complement of Tide detergents, from basic to premium, that run from an efficient $0.12 per laundry load to a premium $0.28 per load.

Image source: P&G.

As a result, Tide has made it into more households, grown its market share, and improved its standing with consumers. "We recently hit an all-time record high U.S. laundry detergent value share of 60%," Chief Financial Officer Jon Moeller told investors in a recent conference call. "Tide now holds a 40% value share of U.S. laundry detergents, with brand equity and net promoter scores as strong as they've ever been," he said.

Best product: Pampers
Pampers, the company's biggest brand at $10 billion in annual sales, performed even better for the company. P&G made a number of changes to its Pampers diaper line this year, including upgrades to the fabric in Pampers Baby Dry, and changes to the look of Pampers Easy Ups. The company also increased its offering for Pampers Swaddlers up to size six.

The result of all of that innovation has been market-leading growth. Pampers' sales have increased at a hefty 5% pace during the last three years, even as P&G's overall growth rate has lumbered along at just slightly positive.

Procter & Gamble has also widened its lead over its main diaper rival, Kimberly-Clark's (KMB 2.44%) Huggies brand. Its share of the U.S. diaper market share was 44% this year, compared to Huggies' 37%. Five years ago, those numbers were switched, with P&G rating well behind Kimberly-Clark.

Source: P&G investor presentation.

P&G executives see plenty of potential growth left in this brand. Pampers Easy Ups alone could help the company reach another $2 billion of global sales.

What's ahead?
Procter & Gamble expects another year of unusually weak sales and profit growth in 2016 as a soft-selling environment combines with its brand-shedding initiative to hurt operating results. But one of the key reasons management decided to slim down to just 65 brands across 10 product categories is that it should help the company focus its research and development efforts on where it will make the biggest impact. That's why investors can look forward to more "new and improved" products out of P&G, especially within its fabric care and baby care business lines.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark and Procter & Gamble. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.