The largest television advertiser in the Middle East will focus its expansion efforts on emerging markets.
P&G pursues ambitious expansion plan
Procter & Gamble (P&G), the largest television advertiser in the Middle East, will focus its expansion efforts on emerging markets such as the Arabian Peninsula and Pakistan to achieve its goal of doubling global sales over the next 15 years. The company, which is based in Cincinnati, Ohio, announced plans earlier this month to expand global sales from more than US$80 billion (Dh293.8bn) to $175bn, through an aggressive campaign to extend the reach of its consumer goods into India, Africa, eastern Europe and the Middle East.
Yassin al Attas, the P&G general manager of external relations for the Arabian Peninsula and Pakistan, said the rate of planned global growth matched the expansion plans of the region. "They want to double the size of the company and it's not coming out of context," he said. "We have ambitious plans to replicate the same thing in this region. We have doubled the size of our business in the past five years, partly because of acquisitions and partly because of the new markets that we got into."
Mr al Attas said the new markets to be developed under his watch would primarily be Pakistan, where P&G broke ground on a $100 million detergent and nappy plant in December, and in Yemen, a relatively untapped country that was expected to be one of the Middle East's fastest growing markets for the company. Expansion is also under way at P&G's Dubai centre, where a third phase of construction at the company's regional headquarters in Jebel Ali will soon expand the building's capacity by 60 per cent, from 220 to 350 employees.
P&G has operated in the Arabian Peninsula since 1956, opening its first centre in Jeddah. Its second Gulf hub was opened in Jebel Ali in 2003. Since then, it has acquired companies with pre-existing profiles in the region, such as Gillette, Wella and Herbal Essences, helping to push it into the top 15 firms in Saudi Arabia. Although consumer products such as shampoo and soap tend to do better in a recession than more discretionary items, P&G has not been immune to the downturn.
"Globally, our sales figures have dropped in the last quarter," Mr al Attas said. "Previously, we were enjoying a growth rate of 5 to 6 per cent, and in the last quarter we had a growth rate of 4 to 5 per cent." Still, even during the tough first quarter of this year, P&G's shampoo brand, Head & Shoulders, remained the top television advertising spender in the region, shelling out $16.58m for TV commercials in the Middle Eastern market, according to the Pan Arab Research Centre. Other P&G brands, including Pantene and Ariel, were also among the top 10 TV ad spenders.
Although the company's media spending tended to move in parallel to its rate of growth, Mr al Attas said the current advertising market was highly attractive for the company and he expected P&G to continue its rate of advertising spending growth of between 7 and 10 per cent. "There has not been a drastic drop or a significant change in our media spend," he said. "In fact, [the recession] has created a very affordable environment for us, because to some extent the rate has come down on certain channels, which provided for us a scale that we are leveraging big time. At the same time, we are investing and trying different media, be it digital, outdoor, PR or internet."
Mr al Attas does not expect an increase in digital spending to cannibalise television advertising, where P&G spends so much of its marketing budget that it wields the power to make or break television channels. He said P&G consciously tried to use this power to foster competition and keep ad prices low. "The strategy that we have is to continue building the capabilities of the other channels, so that we can create competition in the markets," he said. "We don't put all our eggs in one basket."