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Will Proctor & Gamble sink Ivory soap?

Hot Stock Minute

One of America’s most iconic brands could go up for sale.

Proctor & Gamble (PG) CEO Alan Lafley said earlier this month that the company would shed up to 100 brands – more than half – to focus on about 70 or 80 brands that generate 90% of the company’s revenue and 95% of the company’s profits.

Among the brands that P&G will likely keep are Pampers, Tide and Gillette. However, according to The Wall Street Journal, one brand that could be discontinued or sold is the 135-year-old Ivory soap.

"Ivory soap is an iconic brand," Yahoo Finance Editor-in-Chief Aaron Task said. "And really, one of the first brands that was marketed as being something special, something different, because it floats."

Americans, however, have been turning away from bar soap to body washes and liquid soap. The Journal reported Ivory’s market share of the bar soap market went from 20% in the late 1970s to 3.4% today. The paper also reported that Ivory soap only brought in $112 million of Proctor & Gamble’s $83 billion in sales.

Because the bar soap brings in such a small portion of Proctor & Gamble’s revenue, Task said the company is unsure that it wants to devote resources to Ivory anymore. He said a private equity firm or a competitor like Unilever (UL) might look at one of the brands P&G is looking to shed.

A decision hasn't been announced as to what brands P&G will get rid of, and while Ivory may not generate a lot of revenue and profit for the parent company, Task said it’s the indelible mark made by the soap gives it worth.

“Ivory Soap, it floats,” said Task, invoking the soap’s marketing campaign. “It was the first soap that ever did that and it was unique. And that made you think, oh that there must be something special about it.”

"I know this because I was marketed to and it was very successful," Task said. “So, that’s why there’s value in that brand, but obviously not enough for Proctor & Gamble.”

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