History of Procter & Gamble: Timeline and Facts

Procter & Gamble has gone from a simple soap and candle company to a major player in consumer goods. Here’s a look at how the business was made.
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Starting out as a simple soap company in the tough economic times before the Civil War, Procter & Gamble  (PG) - Get Report has grown into a company that makes a little bit of everything within the household products sector. We take things like candles and soap for granted these days. But back in the 1800s, candles were essential for light, and the availability of hygiene products was limited. It is a prime example of businessmen that recognized an area of demand and capitalized on it.

Timeline

According to Procter & Gamble’s website, the Cincinnati company was founded in 1837— a year of financial crisis in the country— by brothers-in-law William Procter and James Gamble. Procter was a candle maker, and Gamble was a soap maker. These products became the foundation of their business.  

1850 - The company begins to add its Moon and Stars logo to goods. Despite rumors of impending civil war, they built a new plant to sustain their growing business.

1859 - Procter & Gamble now does $1 million in sales, having grown into a company with dozens of employees.

1862 - In a turn of fate, the Civil War gives P&G some good fortune as it attains deals to supply candles and soap to Northern armies.

1879 - By this time Gamble’s son, James, has used his chemistry knowledge to create a cheaper equivalent of more expensive soaps. This leads to the Ivory Soap brand, which William Proctor's son Harley named after reading a passage from the Bible—“out of ivory palaces.”

1882 - Son Harley Procter maneuvers to spend more on advertising, marketing the soap across the nation through newspapers.

1887 - P&G initiates one of the first profit-sharing deals. This gave employees a piece of the pie, and quelled frustration among workers.

1890 - The soap business grows into a diverse product lineup of more than 30 different soaps. The company incorporates as a means to increase cash for growth.

1915 - The company opens its first production outside of the U.S.; making Crisco and Ivory Soap in Canada.

1920s - Due to the steady decline of candle demand after the invention of the light bulb, the company phases out candle manufacturing. During this time frame, the company pushes into direct to retail sales in order to create a more consistent production schedule.

In the 1930s P&G buys overseas assets in the Philippine Manufacturing Company.

Through the next decades, P&G goes on to bring more products into its lineup. These include detergents, soap powder, shampoos, toilet goods and a long list of consumer staples.

What’s Happening Today?

It’s probably safe to say that Procter & Gamble has grown into something far beyond what its founders ever imagined. P&G did $67.68 billion in sales last year, with earnings of $3.89 billion, or $1.53 per diluted share. This was a weaker earnings performance than years past, but the company remains a strong contender in the home products industry, with a lineup including Crest toothpaste, Gillette razors, Tide laundry detergent, diapers, Dawn cleaning supplies, and, thanks to the coronavirus, the much sought-after Charmin toilet paper brand.

There are fair arguments about the slacking nature of the company’s growth story. Revenues were stagnant in 2016 and 2017, but have since regained momentum. Mounting competition within the razor industry has dampened the value of the $57 billion Gillette acquisition back in 2005. A move that should have helped P&G grow into a new market has instead been hit with resistant competition from cheap startup razor brands like Harry’s, and the irreverently advertised Dollar Shave Club, which was eventually bought out by Unilever  (UL) - Get Report. Shifting tastes to more relaxed styles have also led to consumers shaving less often. 

Write-offs from Gillette have plagued the company’s earnings results, leading P&G to rely on adjusted earnings results to appease shareholders. It has worked so far, as the stock reached all-time highs prior to the recent market sell-off.

Even in slower times, the stock does carry a history of success. Since 1990, the stock has outpaced the S&P 500 by just under 600%; producing gains of 1,219% during that time frame. With $6.28 billion in cash, and a healthy balance sheet with tons of equity, the company is by no means in trouble. The next few years will be dependent on how P&G can use its scale and position within home products to find a path to gathering market share, or to streamline the business to the more profitable areas of its lineup.

The current rush for toilet paper and cleaning products probably won’t hurt either.