Where is The Procter & Gamble Company (PG) Going?

Significantly, a strong sales growth of over 10.6% in the emerging markets in Asia, and gains of 7.9% and 0.8% in the Americas and Europe, respectively, propelled a 9% increase in Unilever’s operating profit to 7 billion euros in fiscal 2012. Contributing to these gains is the well-timed and well-executed restructuring of the Unilever brand portfolio.

What Product Innovation Is Really?

Besides Unilever, Johnson & Johnson (NYSE:JNJ) is another competitor that appears to have given P&G the heads-up recently, particularly in product innovation. With much hoopla in June last year, Procter & Gamble introduced ZzzQuil, an over-the-counter sleep aid. The thing is that Johnson & Johnson and other competitors have been manufacturing products in this category for some time already.

Delivering meaningful health care innovations, in fact, was one of the growth drivers for Johnson & Johnson, which this January reported 2012 fourth quarter sales of $17.6 billion, up 8.0 percent from the 2011 fourth quarter.  Excluding $2.9 billion after-tax special items, the company’s net earnings for the 2012 quarter rose 7.9 percent to $3.4 billion, sending diluted earnings per share to $1.19, up 5.3 percent from a year earlier. The EPS came out above analysts’ expectations of $1.16 per share.

Market observers also say ZzzQuil is not an innovative breakthrough at all. It is merely a variant or derivative of the company’s NyQuil cold and flu medicine, which has long been misused as a sleep aid.

Tylenol PM Simply Sleep is the Johnson & Johnson product entry in this category, which has beaten P&G’s ZzzQuil to the draw. Notably, too, J&J boasts of  EARTHWARDS, the company’s proprietary process to drive sustainable product innovation across its 250 operating companies within its pharmaceuticals and medical devices, consumer products, and diagnostics sectors.

Final Words on the Competition

P&G, Unilever, and Johnson & Johnson all appear solid stock picks given the strengths of the iconic brands in their portfolios of personal care products. For Procter & Gamble, however, much can still be achieved if it gains further inroads into emerging markets and introduces products that are truly of breakthrough caliber.

The article Where is Procter & Gamble Going? originally appeared on Fool.com and is written by Josef Ray Dagatan.

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