P&G will focus on 70 to 80 consumer brands, including Tide detergent and Pampers diapers, that collectively generate around 90% of the company's sales and 95% of its profits. Andrew Dowell discusses on the News Hub with Paul Vigna. Photo: Getty Images.
Procter & Gamble Co. will shed more than half its brands, a drastic attempt by the world's largest consumer-products company to become more nimble and speed up its growth.
The move is a major strategy shift for a company that expanded aggressively for years. It reflects concerns among investors and top management that P&G has become too bloated to navigate an increasingly competitive market.
Chief Executive A.G. Lafley, who came out of retirement last year for a second stint at the company's helm, said P&G will narrow its focus to 70 to 80 of its biggest brands and shed as many as 100 others whose performance has been lagging. The brands the Cincinnati-based company will keep—like Pampers diapers and Tide detergent—generate 90% of its $83 billion in annual sales and over 95% of its profit.
Procter & Gamble, maker of Tide detergent, plans to exit some 90 to 100 smaller brands, which mostly have annual sales under $100 million. Reuters
P&G didn't say which brands it will sell or shut down, but it will be a sizable culling of products that bring in around $8 billion a year in revenue. The company owns scores of lesser-known brands including Era and Cheer laundry detergent, Clearblue pregnancy tests and Metamucil laxatives. Dozens could prove attractive to private-equity firms that specialize in orphaned brands or companies in countries like China or Brazil looking for a more global presence.
"I'm not interested in size at all," Mr. Lafley said in an interview Friday. "I'm interested in whether we are the preferred choice of shoppers." He said some larger brands may be culled if P&G decides it cannot do well in those segments, and pointed to the company's recent sale of its pet-food brands, including Iams which had over $1 billion in sales.
The move comes as companies across industries have come under pressure from activist investors to simplify their operations to improve results. Companies like Kraft have split themselves in half, while pharmaceutical companies like Novartis AG , GlaxoSmithKline  PLC and Eli Lilly & Co. have done deals to exit some businesses and strengthen their core operations.

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The new plan is a personal turnabout for Mr. Lafley, who bulked up P&G substantially when he ran it from 2000 to 2009, and an acknowledgment that reversing years of slow sales growth won't be easy.
Mr. Lafley rejoined P&G in May 2013 to replace his erstwhile successor, Bob McDonald, who presided over a string of weak results. On Friday, P&G reported results from Mr. Lafley's first year back at the helm that were similar to those of Mr. McDonald in his last year. Sales rose 1% in the year that ended in June—or 3% excluding the impact of acquisitions, divestitures and changes in the value of currencies.
P&G's profit for the year rose 3% to $11.6 billion. Mr. Lafley said P&G delivered on its business and financial commitments over the past year. But, he added, "We could have and should have done better."
P&G's shares rose 3% Friday to $79.65, as investors welcomed the more aggressive effort to slim down. The shares are down about 1% this year, even as the broader market has risen.
In his first stint as CEO, Mr. Lafley's priority was growth. He bought up beauty brands such as Clairol and Wella and presided over the company's $53 billion acquisition of Gillette Co. in 2005, which came with Oral-B toothbrushes and Duracell batteries. The acquisitions, along with strong growth by P&G's legacy brands, helped the company roughly double its sales over the decade.
Since 2010, however, P&G's annual sales have shown only single-digit growth in percentage terms, partly a result of the company's emphasis on premium-priced household products in an environment where consumers have been cutting back on spending.
The consumer-products business is struggling with lackluster sales. After keeping pace with overall economic growth for decades, unit sales of basics like laundry detergent and toothpaste have been largely flat for the past three years in the U.S., P&G's biggest market.
P&G's new approach reflects the reality of the new environment. Executives pointed to weak growth rates for consumer products and said a stronger dollar took a $1.1 billion bite out of the company's profit in the just-ended year.
To counter the broader headwinds, P&G in 2012 launched an aggressive plan to cut costs and improve productivity, but has struggled to accelerate sales. Before he left P&G, Mr. McDonald also said the company would focus its efforts on the products and markets most responsible for its sales and profit.
The company is taking that effort a big step further now by preparing to cut ties with its outlying brands. Many of the labels P&G is expected to shed are small, though it will hang on to some niche market leaders like Fixodent denture adhesives and Dreft laundry detergent for baby clothes.
"Keep buying Dreft," Mr. Lafley said.
Of the brands P&G plans to focus resources on, 23 have sales of $1 billion to $10 billion, 14 have sales between $500 million and $1 billion, and 30 to 40 have sales of $100 million to $500 million.
Had the remaining 90 to 100 brands been excluded from P&G's portfolio for the past few years, the company's organic sales growth would have been a percentage point higher than what it reported, Mr. Lafley said
P&G's plans are likely to set off a frenzy among deal makers. On Friday, investment bankers and private-equity firms were combing through lists of P&G brands to identify deal possibilities. Companies such as B&G Foods Inc. and Pinnacle  Foods Inc., which owns everything from Duncan Hines cake mix to Vlasic pickles, have crafted an entire strategy around buying other groups' brands and leveraging their retail channels.
Brynwood Partners, a private-equity firm that specializes in buying small consumer brands from large companies like Unilever  PLC and Kraft Foods Group Inc., said it would be looking at what P&G might sell. "We are always interested when the larger companies are considering portfolio rationalizations," Brynwood CEO Henk Hartong III said Friday. The firm bought Zest soap from P&G in 2011.
Sorting through P&G's 180 or so brands is a complex task, in part due to oddities in the way the company classifies them.
Some P&G brands, like Pampers, have the same name all over the world. Others, like Always feminine-care products, are sold under the brand Whisper in Asia, but the company considers the two a single brand. P&G also considers its various dishwashing liquids like Dawn in the U.S., Fairy in the U.K. and Joy in Japan "clones" that in essence make them a single brand. But under the Gillette umbrella, the Venus, Mach3 and Fusion razor franchises are considered separate brands."I will be the first to say that counting brands is a very difficult thing," Mr. Lafley said. "Even around here."