henkel - history, evolution, present and the future

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A comprehensive background of Henkel containing its History and Origins, Early Evolution, Modern Business, Global Expansion, Company Structure, Recent Efforts and Company DNA. As one of the chapters of the book FMCG: The Power of Fast-Moving Consumer Goods by authors Greg Thain and John Bradley. For more details on their success story and that of other leading FMCG companies, check www.fmcgbook.com or Amazon http://amzn.to/1jRyd20.

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Page 1: Henkel - History, Evolution, Present and the Future
Page 2: Henkel - History, Evolution, Present and the Future

History & Origin . . . . . . . . . . . . . . . . . . . 3

Early Evolution . . . . . . . . . . . . . . . . . . . . 4

Global Expansion . . . . . . . . . . . . . . . . . 6

Modern Business . . . . . . . . . . . . . . . . . . 8

Company Structure . . . . . . . . . . . . . . 11

Recent Efforts . . . . . . . . . . . . . . . . . . . 13

Company DNA . . . . . . . . . . . . . . . . . . 24

Summary . . . . . . . . . . . . . . . . . . . . . . . 25

Social Media Accounts . . . . . . . . . . . 26

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Page 3: Henkel - History, Evolution, Present and the Future

Founded at Aachen, Germany on 1876 by Friedrich Karl Henkel

Launched as Germany’s very first branded detergent

“Henkel’s Thee”, Germany’s first branded tea

The tea was dropped in 1913, although at its high point it had

generated more than 10% of the total sales

In 1897, he created a potassium-based fertilizer, which he branded

as Martellin, and sold to growers of tobacco, wine-grapes and hops,

all products which conformed to the agenda of 19th-century hard-

working Germans sustainability

Henkel’s Bleich-Soda, Henkel’s Thee and Martellin were the

products of Henkel

His three top sellers, Henkel’s Bleich-Soda, Henkel’s Thee and

Martellin, plus industrial water-glass, topped one million marks,

driven principally by an annual sale of ten million packs of Henkel’s

Bleich-Soda 3

Page 4: Henkel - History, Evolution, Present and the Future

Fritz decided to combine elements of its two principal ingredients –

perborate and silicate.

They came up with Persil, which was launched on 6th June 1907 as

the world’s first self-acting detergent

Fritz had to increase his workforce by 50% and scoured the world

for automated packing machinery to produce 4700 tonnes

Henkel built dedicated production facilities that would make him

Europe’s largest producer of glycerine

By 1912, Henkel was churning out nearly 50,000 tons of product a

year

Persil contributed a massive 40% on it five years after its launch.

Glue was deemed most at risk, so Henkel laboratories, in 1900s

and began experimenting with making adhesives out of water-

glass.

The company launched Sil (No Per), a concentrated detergent and

bleach product after government controls the supply of fats.

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Page 5: Henkel - History, Evolution, Present and the Future

A new advertising campaign for Persil featured what would become

an iconic German image for the brand, Die Weisse Dame (the White

Lady)

The company set about developing specifically targeted products,

launching Henkel-Kleister-trocken (dry paste) in 1928 followed by

Mala, a cold water-soluble glue

Perwoll and lasil were the new synthetic detergents launched in

1949

In 1950, the company launched a new generation of synthetic

resin-based adhesives that signaled the start of a very innovative

decade for the adhesives product range

Launched Pril dishwashing liquid in 1951, Fa soap in 1954, Dixan in

1957 (formulated for the new drum-style washing machines) and

Persil 59 in 1959, the company’s first heavy-duty synthetic

detergent.

The company then focused on new promotional styles and

expansion.

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Page 6: Henkel - History, Evolution, Present and the Future

Henkel’s remorselessly efficient march to global giant-hood began

early when it opened an Austrian sales office in 1886

The first foreign subsidiary was set up in Switzerland

By the end of the 1920s, the company was exporting to almost all

European countries as well as Australia and South America

The export trade grew during the early 1930s, business was

sufficiently large for manufacturing subsidiaries to be set up in

Norway, the Netherlands and Belgium and by 1937 Henkel owned

production facilities in twelve European countries

As early as 1951, the company was sufficiently back on its feet to

open its first overseas subsidiary in South Africa

There was an exclusive trading partner in Japan, the start of a

prolonged series of joint ventures in that country culminating in an

agreement to market Henkel products with the Japanese Lion Corp.

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Page 7: Henkel - History, Evolution, Present and the Future

In 1955, Henkel Brazil SA was founded

In 1959, they found Henkel Mexicana SA

By 1971, offices were opened in London, Montreal, Athens and

Hong Kong, followed by Lagos and Bangkok a year later

In 1977, Henkel bought General Mills Chemicals Inc., which had

substantial operations in the US, Ireland, Brazil and Japan

By 1995, Henkel had 17 companies in Central and Eastern Europe

By 2011, 68% of company employees were located outside

Western Europe, 55% in emerging markets. Henkel’s European

region was still the largest, turning over around €8.5 billion

North America, with sales of €2.7 billion, then Asia-Pacific at €2.3

billion each, Latin America at just over a billion euros with Africa

and Middle East not far behind at €930 million. With 85% of its

sales coming from outside Germany

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Page 8: Henkel - History, Evolution, Present and the Future

Jost Henkel and his brother, Dr. Konrad Henkel, successfully

propelled the business out of the post-war chaos, added a new

stability and finally launched the company into a new expansionist

phase that would create a global enterprise

By 1962, Camay and Fairy were being produced under contract

Henkel set up an ecology department in its Düsseldorf laboratories,

focused on finding fully biodegradable surfactants and a

replacement for phosphates

Henkel continued to grow its adhesives business virtually

unhindered and in 1969 it made the crucial leap of combining an

adhesive innovation with its well-honed consumer marketing skills

to create Pritt the world’s first glue stick in Europe

Henkel had also gained a foothold in the cosmetics and toiletries

sectors particularly since the launch of Creme 21, a hand cream

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Page 9: Henkel - History, Evolution, Present and the Future

In 1971, it merged these various elements to create one focused

business unit, while still adding to its ever-expanding ranges of

household cleaners and detergents

In 1974, the company took another major step buying a significant

shareholding in the Clorox Company

Clorox produced and marketed some of Henkel’s brands in the US,

Canada and Puerto Rico in return for access to Henkel’s formidable

research and development expertise

Henkel was now also expanding rapidly overseas: in Australia,

Guatemala, Venezuela, Indonesia and Jamaica

In 1980, Henkel America brought into automotive supply industry

and acquiring a maker of adhesives for household and schools

sectors

In West Germany, the company re-launched Persil, with Sasil, as a

low-phosphate brand. 9

Page 10: Henkel - History, Evolution, Present and the Future

By 1987, Henkel acquired a minority stake in the US Loctite

Corporation, America’s leading sealants and adhesives firm

In 1988, the Wall Street Journal described their approach as ‘a

blend of America’s short-term interest on profit and West

Germany’s long-term emphasis on the future’.

Henkel published new corporate guidelines which placed

environmental protection

In 1995, Henkel bought Schwarzkopf cosmetics and personal care

Henkel launched a hostile bid for the 65% of Loctite

In 1997, acquired the Los Angeles DEP Corporation, that gave the

company a foothold in the US hair care market.

Came a 50:50 partnership with Dial Corporation to develop new

laundry detergent products sold under Dial’s Purex brand

70% of Henkel revenues were coming from outside Germany

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Page 11: Henkel - History, Evolution, Present and the Future

As early as 1919, Fritz Henkel and his three children appointed an

eight-strong management committee to run the day-to-day

business

Henkel was no personal fiefdom like William Lever’s Lever Brothers.

Today the company is structured along product sector rather than

geographical lines.

There are three distinct branded product sectors: Adhesives,

Laundry & Home Care and Beauty Care

Their main brands Persil, Purex and Dixan, Laundry and Home Care

account for slightly over a quarter of sales.

Then comes Beauty Care, growing quickly, with brands like

Schwarzkopf, Dial and Syoss

They established their fourth division, Henkel Technologies in 2001.

HT deals in adhesives and sealants for products such as cars,

books, computers, aircraft, cell phones, shoes and refrigerators 11

Page 12: Henkel - History, Evolution, Present and the Future

Henkel is run by a triumvirate at the corporate level.

The Management Board whose responsible for the day-to-day

running of the company

The Shareholders’ Committee who meets regularly with the

Management Board to discuss strategic direction

The Supervisory Board, a sixteen-member with equal numbers of

shareholder and employee representatives who advise and monitor

the Management Board in its stewardship of the company.

The family’s continuing possession of around 80% of the voting

shares, creates a structure that balances the needs and inputs of

all the key stakeholder groups

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Page 13: Henkel - History, Evolution, Present and the Future

2004

The big event of the year was a transformation of Henkel’s position

in North America

The largest Dial was whose Purex brand greatly increased Henkel’s

share of the US detergents market

Henkel exchanged its 29% stake in Clorox for Clorox’s household

cleaners and insecticides brands in North America and South Korea

Henkel’s total share of US sales increased from 12% in 2003 to a

forecast 25% in 2005

Henkel become global number three in Laundry and Home Care

behind P&G and Unilever, number one in Germany and number two

in Europe

In cosmetics/toiletries, Henkel was number one in Germany,

number four in Europe and number eight worldwide

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Page 14: Henkel - History, Evolution, Present and the Future

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In adhesives, Henkel remained a clear global number one

The acquisitions added 13% to annual sales, reaching €10.6 billion

The Laundry and Home Care category was juiced up the second

half-year with the launches of Bref Power cleaner and Persil

Megaperls with ShortWash

The sales of cosmetics/toiletries inched ahead by just under 2%,

keeping pace with market growth.

The main progress coming from Diadermine, a high-performance

skin care range that apparently guarantees a visibly younger-

looking skin

Henkel Technologies focused on providing bespoke products to

individual customers

Overall, the company’s product range was protected by over 7,600

patents with a further 5,200 pending

Page 15: Henkel - History, Evolution, Present and the Future

2005

Double-digit sales increase of 13% took sales to within a whisker of

€12 billion

Henkel gained share in a sluggish European market

The Consumer and Craftsmen Adhesives business grew organically

by 5%, again largely due to big increases in Eastern Europe.

The success of the company resulted in planning to extend to Asia,

Latin America and the Middle East led by new lines such as Pritt

Easy Start adhesive tape

Henkel set itself two future goals: to increase the share of business

from emerging markets to 30% by 2008 and to increase the share

of business from innovation in any three-year period from 25% up

to 30%

Henkel declared 2006 to be its “Year of Innovation” and expecting

all employees to chip in with ideas15

Page 16: Henkel - History, Evolution, Present and the Future

2006

The Year of Innovation - 67,000 ideas submitted, more than one for

every employee and 20% next-stage approved – it was such as

success that the scheme was extended to a three-year program

and a Henkel Innovation Trophy was instigated for an open

innovation program.

Innovation was at the heart of a much-improved sales

performance.

Reported sales only increased by 6.4%, in 2006 there was a neutral

effect from acquisitions and disposals, organic growth had risen to

a very healthy 6%.

The expansion of the Shanghai research facility to cover all four

product groups and the transition of Henkel’s cellular biology

research company to work on skin research with the brief of

developing an alternative to animal testing 16

Page 17: Henkel - History, Evolution, Present and the Future

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2007

Sales only advanced by 2.6% to just over €13 billion

The targeted growth regions of Eastern Europe, Africa, the Middle

East, Latin America and Asia (except Japan) collectively posted an

organic sales increase of over 15%

Henkel had 52 production sites around the world, the largest still in

its Düsseldorf home

Henkel’s future goal was to become the clear innovation leader for

each category in which it competed

2008

Sales increased by 8% to over €14 billion sales

The acquisition of National Starch’s Adhesives and Electronic

Materials businesses for €3.7 billion

The company sales increased from 26% in 2004 to 37%

Page 18: Henkel - History, Evolution, Present and the Future

Henkel enjoyed the number-one positions in over 100 country

product categories

The year also saw the development of a new three strategic

priorities:

Achieve full business potential

Focus more on customers

Strengthen the global team

Increased profitability in the mass categories of heavy-duty laundry

and hand dishwashing products while drive growth in the profitable

specialty categories

Increased sales of the top three brands (Schwarzkopf, Persil and

Loctite) twice as fast as company average

A reduction in the number of production sites in mature markets

Concentrate on strategic suppliers and on procurement from low-

wage countries 18

Page 19: Henkel - History, Evolution, Present and the Future

2009

The Organic sales were down over 6%.

In the second half-year, Henkel’s organic sales almost matched the

slowdown level of 2008, pushing total performance for the year

down by 3.5%

The organic sales in laundry and home care grew by 2.9%,

cosmetics/toiletries were doing even better growing by 3.5%

Henkel was gaining market share in its consumer categories

primarily because of the very strong innovation program

The sales from new products in Laundry and Home Care and

cosmetics/toiletries launched in the previous three years had now

reached over 40%

Overall top-line sales for the year hit just over €13.5 billion, a

decline of 3.9% when currency movements and

acquisitions/disposals occurred.19

Page 20: Henkel - History, Evolution, Present and the Future

2010

Henkel bounced back in spectacular style, growing top-line sales

by 11% to over €15 billion, underpinned by a 7% organic growth

without currency effects and acquisitions/disposals

All three sectors grew, albeit at differing levels Laundry and Home

Care by 1.5% in a shrinking market, cosmetics/toiletries by 4.8%;

and Adhesive Technologies by nearly 12% and all three improved

their market share

Company sales had again grown by double digits in the targeted

emerging markets growth region more than 19% for the top line

and over 12% organically

The overall company growth was in fact more than totally due to a

volume growth of 8.5% net prices had declined by 1.5%

Henkel’s largest revenue rise in the Western Europe since 2007

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Page 21: Henkel - History, Evolution, Present and the Future

2011

The change to a more sedate top-line increase by over 3.4%, due

to more currency movements as underlying organic growth had

declined slightly to a still impressive plus 5.9%

Company’s top ten brands now made up a good 42% of sales,

given these heavily branded and highly recognizable products’

better margins, had powered a double-digit increase in company

earnings

Cosmetics/toiletries moved up to a 43% innovation rate, with R&D

R & D investment had settled at a slightly lower level of 2.5% of

sales, reflecting the shift in emphasis to open innovation, with

developments underway reflecting the continued focus on not just

the growth but also sustainability

The company launched a new sustainability strategy; it resolved to

triple value created relative to ecological footprint by 203021

Page 22: Henkel - History, Evolution, Present and the Future

2012

Sales increased by 6%, a performance all the divisions contributed

to equally as all gained global market share. The organic sales

growth of more than 3.8% was mostly driven by price increases

Henkel again was successful in passing along input cost increases,

an ability fuelled by its consistently very high innovation rate

Gained double-digit figures in Middle East, Eastern Europe, Africa,

India and China. Overall, emerging markets accounted for 43% of

global sales and increased by 9%, 7.8% of which was organic

growth

Henkel’s strategy contained four strategic imperatives

Out-perform

Globalise

Simplify

Inspire 22

Page 23: Henkel - History, Evolution, Present and the Future

Green Innovator

Henkel stands alone as a global player who has been, is and

will remain completely committed to an innovation program

that constantly seeks to reduce the ecological impact of its

products.

Careful Competitor

One thing that stands out in Henkel’s history is that it has no

desire to be absolutely everywhere just for the sake of it.

A German owned and ran as it is, it was Euro-centric at heart,

dominant in large German markets and a key player in the rest of

Europe

Henkel has substantial businesses in both branded consumer

goods and industrial supplies

Henkel’s inbuilt strategic advantage is huge: it has now been

measuring all its core competences against this agenda for

decades

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Page 24: Henkel - History, Evolution, Present and the Future

Henkel now has a $20 billion turnover, almost equally between its

industrially biased, Adhesive Technologies and the highly branded

home and personal care businesses.

The company mission statement hails it as ‘A global leader in

brands and technologies’.

It defines its values as follows: • We put our customers at the centre of what we do • We value, challenge and reward our people • We drive excellent sustainable financial performance • We are committed to leadership in sustainability • We build our future on our family business foundation

Leadership in sustainability value indeed sustain both continued

growth and continued success for Henkel

It had enough platforms, particularly in Adhesive Technologies and

cosmetics/toiletries to benefit from the continued rise of emerging

markets 23

Page 25: Henkel - History, Evolution, Present and the Future

Website: www.henkel.com/index.htm

LinkedIn: www.linkedin.com/company/henkel_2

Facebook: www.facebook.com/henkel

Twitter: www.twitter.com/Henkel

Youtube: www.youtube.com/user/Henkel

Google Plus: plus.google.com/+henkel/about

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