Sunday, January 13, 2002

Jager's P&G legacy: Products now making it to market

By Cliff Peale
The Cincinnati Enquirer

Durk Jager and some of his products.
(Kelvin Belford illustration)
| ZOOM |
        Although Durk Jager no longer roams the 11th floor at Procter & Gamble's headquarters, his legacy lives on store shelves. That's where about half a dozen products that Mr. Jager, former chairman and chief executive, pushed through the P&G pipeline are now.

        They include winners such as Whitestrips teeth whitener and Swiffer floor cleaner — and losers like Fit produce wash and the Dryel home dry-cleaning kit.

        Mr. Jager left other marks at P&G's downtown headquarters. He launched a restructuring of the company's global work force, and started innovations that revitalized existing brands such as Olay.

        But the brusque Dutchman's mantra was getting new products on store shelves more quickly, and those brands are what ultimately will determine his legacy there.

        “I give them credit for having the guts to come up with some of this stuff,” said Tom Vierhile, general manager of Marketing Intelligence Service, which tracks new consumer products.

        “When you're a multibillion-dollar company, you're not going to make it with little ideas.”

        Mr. Jager's replacement, A.G. Lafley, has scaled back the product-development frenzy — pouring more of those funds into marketing big brands such as Pampers diapers and Pantene shampoo.

        In the short term, that has worked, stabilizing P&G's stock price. The company's earnings have recovered slowly, and it said late last year that it expects to see encouraging results for the second quarter that ended Dec. 31.

        But the fundamental problem that Mr. Jager recognized remains: How can P&G grow revenue when its flagship products already lead the market?

        His answer was simple: More products. In mid-1999, Mr. Jager pledged an effort to deliver 20 new products during the next 18 months.

        Although Wall Street investors applaud Mr. Lafley's steady hand, they recognize that Mr. Jager had a point.

        Bill Steele, who tracks P&G for Banc of America Securities in San Francisco, said the constant drive to push new products and new ideas through P&G will last.

        “You have to stay current, and you have to develop new products, and I think Durk was correct in that,” Mr. Steele said. “P&G has got to be a global consumer-products powerhouse, which means you're gaining market share in good times and bad.”

        P&G declined to comment on the product-development program. But the company has consistently said it will continue to bring new products to market, if less frenetically than during Mr. Jager's tenure.

        There are, of course, several products that made it through P&G's development pipeline that ended up on the cutting-room floor. One is Impress, a food wrap that completed its test market a year ago. P&G said it wouldn't go national in its current form.

        A spokeswoman said P&G is looking to different ways to profit from the Impress technology, including a swap or sale, or licensing it to another company.

        For now, most remember Mr. Jager for his ignominious exit from P&G on June 8, 2000. That day, P&G revealed it would miss Wall Street earnings estimates for the second straight quarter.

        Added to a bungled attempt to buy drug giant Warner-Lambert Co. early in 2000, it was too much for P&G's board of directors. They replaced Mr. Jager with Mr. Lafley.

        Mr. Lafley said P&G had gone too fast in pushing new products, and he set about bolstering core brands such as Crest toothpaste and Folgers coffee.

        Looking ahead, P&G has several new products on the horizon. Its Mason-based pharmaceutical drug unit has seen a hit with the Actonel osteoporosis drug, and continues testing several other drugs.

        And Procter's beleaguered food-and-beverage division late last year unveiled Torengos, a tortilla chip made for easy dipping.

        “You can't judge any one company on any one new product launch,” Mr. Steele said. “You have to look at it like a portfolio of stocks. I think (Mr. Jager's product-development program) was clearly worth it.”

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