The Top 50: greener than ever!

EVERY YEAR WHEN WE PUT TOGETHER The Top 50, our annual look at the leading U.S.-based companies in the household and personal products industry, we search for overriding trends that can tie many of these seemingly disparate companies together. In previous years, the emphasis was on mergers and aquisitions. As you'll soon read, M&A is alive and well in the industry, but this year, the big news is on going green. Nevermind that no one is quite sure what that means--companies are emphasizing an array of green solutions to attract customers to their products. For example, Clorox acquired Burt's Bees and rolled out Green Works, a line of environmentally-friendly cleaning products; S.C. Johnson acquired Caldrea and Colgate opened a manufacturing facility that makes toothpaste faster than ever but at the same time, uses less water, energy and materials. Industrial and institutional cleaning companies are emphasizing their green solutions too. On the following pages, you'll find out how Johnson Diversey, State and other I&I companies are rolling out products with a more environmentally-friendly profile.

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Acquisitions, of course, continue to get plenty of coverage in The Top 50. At press time, Huish was said to be in talks to acquire the North American laundry detergent business of Unilever. In April, Coty sold the Del pharmaceuticals business to Church & Dwight. And last year, Energizer became a major player in the sun care segment with the acquisition of Playtex Products, which owned the Banana Boat and Hawaiian Tropic brands.

Companies come and go, but some things remain constant in The Top 50--such as Procter & Gamble remaining No. 1 on our list as it has since we started compiling The Top 50 in 1978. Rounding out the top 10 this year are: Colgate-Palmolive, S.C. Johnson, Estee Lauder, Avon, Johnson & Johnson, Access Business Group, Ecolab, Coty and Johnson Diversey. New companies on our list include Energizer, Dermalogica and Tupperware.

A brief word on our ranking system. When two companies have the same annual sales, they share that number. That's why this edition of The Top 50 ends at No. 49 with a tie between Blistex and H2O Flus.

We hope you enjoy this edition of The Top 50. As always, we welcome your comments on our ranking, as well as anything else that appears in HAPPI. Be sure to read our August issue, which includes The International Top 30, our article on the largest manufacturers of household and personal products with corporate headquarters outside the U.S.

1. Procter & Gamble

Cincinnati, OH

513.983.1100

www.pg.com

Sales: $55.7 billion

Sales: $55.7 billion for household, personal care and oral care products. Corporate sales: $76.4 billion. Net income: $10.3 billion for the year ended June 30, 2007.

Key Personnel: A.G. Lafley, chairman, president and chief executive officer; Susan E. Arnold, president, global business units; Robert A. McDonald, chief operating officer; Clayton C. Daley Jr., vice chairman and chief financial officer; Dimitri Panayotopoulos, vice chairman, global household care; Robert A. Steele, vice chairman, global health and well-being; Ed Shirley, vice chairman, global beauty & grooming; Werner Geissler, vice chairman, global operations; Steve Bishop, president, P&G North America; Charles V. Bergh, group president, global personal care; Christopher de Lapuente, group president, global hair care; Virginia C. Drosos, president, global personal beauty; Robert Jongstra, president, global professional care; Hartwig Langer, president, global prestige products.

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Major Products: Baby care--Pampers and Luvs wipes; Beauty care--cosmetics, fragrances, hair care, antiperspirants and skin/beauty care marketed under such brands as Gillette, Pantene, Olay, Head & Shoulders, Cover Girl, Clairol Herbal Essences, Max Factor, Hugo Boss, Secret, SK-II, Zest, Safeguard, Rejoice, Vidal Sassoon, Clairol Nice 'n Easy, Old Spice, Pert, Ivory, Sure, Camay, Laura Biagiotti, Physique, Noxzema, Giorgio and Muse. Fabric and Home care--bleach and pre-wash additives, care for special fabrics, dish care, fabric conditioners, household cleaners and laundry care including brands such as Tide, Ariel, Downy, Lenor, Gain, Cascade, Ace, Cheer, Bold, Swifter, Bounce, Dash, Dawn, Fairy, Joy, Febreze, Era, Bonux, Dreft, Daz, Vizir, Salvo, Mr. Proper, Mr. Clean, Flash, Viakal, Dryel, Alomatik, Ivory, Maestro Limpio and Rindex. Health care--Crest toothpaste, Scope mouthwash and Thermacare heat pads.

New Products: Home care--Pure Essentials and Simple Pleasures laundry detergents, Tide with Dawn Stain Scrubbers, Downy Simple Pleasures Radiance Collection, Mr. Clean Magic Eraser with Febreze fresh scent, Febreze to Go, Febreze Candles. Oral care--Crest Healthy Radiance Toothpaste System. Personal care--Old Spice Pro Strength. Fragrance--Boss Pure fragrance. Beauty--Nice'n Easy Perfect 10. To be launched: Olay Definity Color Recapture (July), Olay Definity Night Anti-Spot Treatment (July), Olay Total Effects Plus Touch of Foundation (July), Avril Lavigne fragrance (2009).

Comments: It was another year of double-digit gains for the largest household and personal products company in the world. Corporate sales rose 12% last year, while net income increased 13.5%. By global business unit (GBU), beauty accounted for 30% of net sales, followed by fabric and home care (24%); baby care and family care (16%); health care (12%); blades and razors (7%); snacks, coffee and pet care (6%); and Duracell and Braun (5%).

Sales were up behind 9% unit volume growth, including the impact of an extra three months of Gillette results in the current year. Organic volume increased 5% and growth was broad-based, with 15 of P&G's top 16 countries posting year-on-year growth. Developing regions continued to lead the growth with double-digit increases for the year. Organic sales increased 7% versus the prior year.

By business segment, fabric and home care grew organic sales 8%, with double-digit growth in developing markets and mid-single-digit growth in developed regions. Key growth drivers included Tide Simple Pleasures, Gain Joyful Expressions and Febreze Noticeables. Net sales rose 11% to nearly $19 billion. Unit volume was up 8%. Global market share increased 1%.

Beauty organic sales increased 5%, led by strong growth in feminine care, prestige fragrances and hair care. Billion-dollar brands Always, Olay and Head & Shoulders each grew sales double-digits for the year. Overall, beauty sales rose 9% to nearly $23 billion and net earnings increased 12% to nearly $3.5 billion. Unit volume was up 5%, driven by double-digit gains in developing regions. Prestige fragrance volume was up double digits behind The One, Boss Selection and Boss Femme fragrance initiatives and the addition of Dolce & Gabbana. Now P&G wants more. Last month, the company signed a fragrance licensing deal with singer Avril Lavigne, a pop star who hits high notes with consumers in their early teens. A fragrance will debut in 2009. Ms. Lavigne joins a growing stable of youth-oriented fragrance licenses including Puma, Christina Aguilera and Replay, an Italian jeans brands. Last year, P&G Prestige Products sold 4711 cologne to Maurer + Wirtz.

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Skin care volume was up in the high single digits, behind Olay Definity and Regenerist product initiatives. Hair care volume increased in the mid-single digits, due to product initiatives on Pantene, Head & Shoulders and Herbal Essences, and continued expansion in developing regions.

Health care organic sales increased 6%, driven by very strong growth in oral care. Net sales increased 14% to $9 billion. In the U.S., Crest extended its category market leadership to 38% behind the success of the Pro-Health line.

More than 80% of P&G's sales come from its 41 largest brands--each generating more than $500 million in annual sales. At the end of fiscal 2007, the company boasted 23 billion-dollar brands. Among the highlights, Head & Shoulders has nearly doubled its annual sales in just four years, making it the second largest shampoo brand in the world. Meanwhile, Pantene is the largest hair care brand in the world, with sales approaching $3 billion. In laundry care, Gain has doubled sales in the past five years on the strength of its fragrance. Finally, Crest remains the largest toothpaste brand in the U.S. thanks to demand for Nature's Expressions and Pro-Health.

In fiscal 2007, P&G generated more than $20 billion in sales from developing markets, which is more than double the sales level at the beginning of the decade.

Gross margins improved 60 basis points to 52%.

For fiscal 2008, the company has restructured its global business units into three groups: Beauty (beauty and grooming), Health and Well-being (health care, snacks, coffee and pet care) and Household Care (fabric care and home care, baby care and family care).

For the nine months ended March 31, 2008, P&G's sales rose 9% to $62.2 billion and net income rose 2% to $9 billion. Sales of beauty products rose 8% to $14.4 billion. Grooming product sales increased 11% to $6.1 billion. Health care sales increased 9% to $10.9 billion, and fabric and home care sales increased 10% to $17.7 billion.

In May, P&G put its Stamford, CT property on the market. The nearly 33-acre site had been the home of Clairol.

"Clairol has enjoyed its tenure in Stamford. Now with the sale of this property we are committed to bringing a positive influence to the future of Stamford as a vital community," said Patrice Louvet, vice president and general manager of P&G global retail hair colin, in a statement.