Jose Carlos Gonzalez Hurtado - or JC, as his business associates and employees prefer to call him - relaxes in his chair. The CEO of Procter & Gamble Israel knows this is his last meeting with Israeli journalists. He will soon be winding up his term here and flying to Ukraine to oversee the company's local operations there, with a workforce of some 2,000 employees and a few hundred more distributors.
Since he began working for P&G about 15 years ago, Hurtado has found himself in dangerous situations in places he would not have visited on his own.
"Once, I was almost killed in Yemen," he recalls. "A few years ago, I was sent by the company to develop P&G's activities in that country and on one of my journeys to an outlying town we got lost. There we were in a creaky car in the middle of a khat field, when the field's owners began shooting at us with Kalashnikovs because they thought we had come to steal from them."
Hurtado also dealt with other Kalashnikov threats after one of the senior religious officials in Yemen declared that P&G was in league with the devil because the company distributed free tampon samples to Yemenite women.
Hurtado is also a controversial figure in Israel - but for other reasons. P&G's competitors and suppliers criticize his methods, but there are also many who hold him in esteem.
"He is a pleasant man, special and different in a good way than many of our other clients," says one of the advertisers with whom Hurtado has worked on a regular basis in the three years he has been running P&G's Israeli operations.
Over the past three years, Hurtado has been responsible for the market penetration of more than 10 new brands and products, the most successful of which are Ariel laundry detergent, Fairy dishwashing liquid and three shampoo brands - Head & Shoulders, Pantene, and Herbal Essence. Still, Hurtado has had his failures, including Secret deodorant and Crest toothpaste - two top brands in the United States that did not make it in the local market.
Hurtado gained more than a few enemies here, due in part to the many battles he fought on various fronts: feminine hygiene (Always and Alldays), disposable diapers (Pampers), hair care and detergents (Ariel, Tide, Tip, Biomat and Tinokleen). "He doesn't play the game fairly," complained one competitor.
`What is fair play?'
Hurtado doesn't let the criticism bother him.
"What is fair play?" he asks. "Just because they are losing the game, they say that I am not playing fairly. My competitors in Israel are biased. Ariel is 50 percent more expensive than most of the competition - they are the ones who lower prices and then blame me. The fact is that, of all the multinational companies in Israel, we grew during the recession and they didn't. During my three years here the company has doubled the number of its brands in Israel and sales have grown by more than 50 percent. The competition was only good for us."
"They say I'm aggressive," continues Hurtado. "They're right. I am aggressive because I want to win in the marketing war. Unlike the others, however, I have never given a bribe or played any game unfairly or illegally. There are some in our industry who sell their souls to the devil in order to win one marketing battle."
Still, Hurtado's competitors blame him for lowering prices too much in order to increase his market share. They say he can do this "because he has deep pockets and doesn't care if the whole [product] category is harmed."
This is not the first time Hurtado has had to defend P&G's price policy.
"Before we arrived," says Hurtado, "Israeli consumers paid high prices, like in Europe, for inferior quality products. We entered the diaper market, lowered the prices to reasonable levels and the quality of the products marketed here improved significantly. It's a known fact that in the paper towels category, where we are not active and Hogla-Kimberly has the monopoly, the prices are very high. Hogla is trying to finance its marketing expenses on Kotex via sectors in which they have a monopoly."
The mention of Kotex and Hogla-Kimberly is one thing that makes Hurtado angry. Hogla is P&G's biggest competitor, not only in Israel, and this year made Hurtado's life particularly difficult due to the launching of Kotex brand feminine hygiene products, which compete with P&G's Always and Alldays. Still, Hurtado insists that Kotex is a failure.
"They invested a ton of money for a small market share, but Hogla-Kimberly is not to blame for the failure. Despite the excellent marketing job, the products failed because they are simply not good. That is the reason that Kotex has failed all over the world. In Britain, the products were recently removed from the shelves."
Hurtado has no doubt who will win this battle. "In the long run we will beat Hogla-Kimberly," says Hurtado. "We have newer and better products."
Hurtado believes the R&D budgets will ultimately tip the scales in P&G's favor, as the conglomerate has greater resources ("Pampers' sales worldwide total $6 billion - about half of Kimberly's sales for all its products").
"The success of Huggies and Titulim is no coincidence," said a Hogla spokesperson in response this week. "Kotex is successful in Israel, too, and serves as an example for the rest of Europe, where introductory campaigns for the new Kotex products are currently underway."
To a great extent, ever since P&G opened its Israeli branch in 2001, it has brought about many changes in consumer culture in Israel. In retail marketing, for example, P&G is credited for much of the success of the Hetzi Hinam chain and some claim P&G financed the chain via larger discounts than granted to the other big chains, as well as generous credit terms.
Hurtado denies these claims, saying that P&G has a no-favoritism policy, and attributing the lower prices at Hetzi Hinam to the chain view of P&G's products as "crowd-drawers." Hurtado notes that in most countries chain stores use hair-care products to attract customers, while in Israel baby products are the drawing card.
Hurtado has learned much about Israeli consumers over the past three years.
"They demand much more than consumers in other countries. They are smart and knowledgeable, so the companies have no choice but to continue innovating." That is why P&G chose Israel for the launch of its new diapers, described as "the Rolls Royce of diapers."
Israeli consumers do not want to feel they are paying more for a product than it is worth.
"That's why Huggies Supreme did not succeed here - it is a good product, but is not worth the price being charged for it," says Hurtado.
As for Israeli consumer loyalty, Hurtado says it depends on the category. There is greater consumer loyalty to disposable diaper brands, and less to shampoos. Gaining consumer loyalty in Israel is also harder than in Europe, says Hurtado, because there are so many more products on the shelves.
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