To hear Nelson Peltz tell it, Procter & Gamble is a dinosaur as a titanic agglomeration of huge, traditional CPG brands operating at a time when consumers worldwide are rapidly gravitating to smaller, agile and niche brands, especially one with a unique story that speaks to authenticity, transparency and purpose. He wants representation on the board of the Cincinnati-based giant so that he can press his vision on a reluctant management team.
To hear P&G tell it, Peltz is a brash billionaire and opportunistic pest who doesn’t appreciate the role that big and powerful brands can still play with consumers worldwide, as its giant brands such as Tide and Crest spin off new products so effective they create and dominate new categories, as Crest’s Spinbrush and Tide’s Pods have done. P&G also has hundreds of smaller new brands and products bubbling up through test markets all over the world.
The competing visions of P&G’s future are set to clash on Tuesday, following months of what has become by far the most expensive corporate-proxy contest in US history. Shareholders will get to vote on whether Peltz, whose Trian Partners fund owns 1.5 percent of the company, should get a seat on the P&G board—or be rejected, as P&G is hoping.
To be sure, P&G has had challenges in recent years, losing sales and market share to old and new rivals alike and seeing some brands lose their relevance. Under A.G. Lafley during 2015 and 2016, in his second stint as CEO, and under his successor David Taylor, the company has been trimming billions of dollars and shedding brands as it tries to get back to the basics that made Procter & Gamble a colossus of global business with dozens of billion-dollar brands.
To Peltz, however, that basic vision is more of a problem even than how P&G has been executing it. “All the action today is local,” Peltz told the Wall Street Journal. “It’s these small brands. It’s what the millennials want. They want a brand with emotion, a brand that’s got a story behind it, a brand that brings value to the environment or is organic.” (Think RXBAR, Sir Kensington’s and Dollar Shave Club, to cite three recent examples of indie brands now owned by CPG giants.)
And while P&G has been recasting some of its brands in a sustainability mode and otherwise trying to stay on trend with idealistic millennial consumers, the company isn’t about to apologize for its big brand building blocks that, its leaders say, generate the sales and profits to give it the opportunity to experiment in the first place.
“Declaring big brands dead and buried just because there is new media and a new generation is wrong,” Jim McNerney, P&G’s lead director and the former CEO of Boeing and 3M, told WSJ. “Our new world is big brands presented in different ways through different media.”
Taylor has said that the company is open to creating or acquiring new brands but believes the better strategy is to continue to develop new products within its existing brands, helping it to leverage name recognition and distribution channels that already are in place.
But while Taylor is waiting for some of his efforts to bear fruit, the Journal noted, he’s pumped for Tuesday’s tangle with Peltz. “I’m getting fired up,” he said. “I’m not mad, though. I’m determined.”
And as TheStreet.com notes, even if Peltz loses, his agitating hasn’t been for naught: “Peltz’s criticisms of the company have sent a strong message to CEO David Taylor about the need to acquire lesser-known brands that boast millennials as customers.”