How did Procter & Gamble challenge Unilever’s control over the British soap industry?
Thomas Hedley (1809 – 1890) was born at Harnham, Northumberland. He settled in Gateshead from 1826.
Hedley entered into partnership with John Greene (1800 – 1870), to form John Greene & Co, soap manufacturers of City Road, Newcastle upon Tyne, from 1838.
John Greene left the partnership in 1860 and Thomas Hedley assumed full control. The name of the business was changed to Thomas Hedley & Co. He was assisted by his brother, Edward Armorer Hedley (1826 – 1909).
Thomas Hedley served as Mayor of Newcastle in 1863-4. He was also a director of the Consett Iron Co from 1869 until his death, and was closely identified with its success.
Thomas Hedley & Co employed 26 men and eight boys by 1871.
Thomas Hedley died in 1890. He was succeeded by Edward Armorer Hedley as the principal of the business.
Fairy soap is introduced and subsequent growth
Thomas Hedley & Co was incorporated with a capital of £30,000 in 1898. Up to fifty different types of toilet, household and manufacturing soaps were produced.
Fairy soap had been introduced by 1899.
Thomas Hedley & Co had a capital of £70,000 in 1905. Soap, candles, varnish and chemicals were manufactured. It was a private company, and the shareholders all resided in Newcastle upon Tyne, Stocksfield and Gosforth.
Fairy soap was reformulated from 1926; low-cost rosin was removed and replaced by olive oil, which was advertised as leaving hands feeling smoother and softer. Thomas Hedley acquired olive groves and established a packing plant in Andalusia, Spain.
Thomas Hedley & Co had an issued capital of £500,000 by 1929. Output of soap amounted to 750,000 boxes a year, with annual sales of between $2.5 million to $3 million. Thomas Hedley & Co was the largest soap manufacturer in the North of England, and the largest independent soap manufacturer in Britain. Hedley products enjoyed distribution across Britain and Ireland, and the company claimed around two percent of the British soap market. As well as the Newcastle site, there were two subsidiary factories in Birmingham and one at Wath upon Dearne, Yorkshire.
Acquisition by Procter & Gamble
Procter & Gamble, the largest soap manufacturer in North America, acquired the majority of the shares in Thomas Hedley & Co of Newcastle in 1930. It was the first overseas acquisition for Procter & Gamble, and was motivated, in part, by a desire to divert the attention of Lever Brothers from the American market by challenging the rival soap manufacturer on its home turf. The takeover also provided Procter & Gamble with entry to the Southern European market, which Thomas Hedley & Co supplied with soft soap.
Procter & Gamble doubled the capacity of the Newcastle factory and increased production. Oxydol, a Procter & Gamble washing powder, had been introduced by 1931. Soon, Thomas Hedley & Co was manufacturing all Procter & Gamble products sold in the British and European markets.
Procter & Gamble introduced one week paid annual leave for employees at Thomas Hedley. Previously holiday had been unpaid.
Two new factories were established on a ten acre site at Trafford Park, Manchester from 1934. It was of a similar size, if not larger, than the Newcastle site. Manchester was chosen due to its accessibility for deep water shipping via the Manchester Ship Canal, and for its large consumer market. Tennis courts and athletic fields were provided for the use of staff.
Growing sales of the three leading brands; Fairy Soap, Oxydol and Sylvan Flakes, a soap flakes product, saw the Trafford Park site increased to 15 acres by 1937.
Dreft soapless detergent was introduced from 1937.
Thomas Hedley & Co claimed a 15 percent share of the British soap market by 1938, largely due to strong investment from Procter & Gamble.
A 15-acre site was acquired at West Thurrock in Kent, and a large factory was established in 1940. The site was chosen for its strong distribution links, and its proximity to the London consumer market.
About two thirds of after-tax profits were reinvested in the business between 1930 and 1956.
Procter & Gamble claimed 25 percent of the British soap and detergents market by 1949.
Tide, an all-purpose synthetic detergent, was introduced from 1950. Accompanied by an unprecedented marketing campaign, Tide was a great success, and its sales challenged that of its Unilever rival, Persil, by 1953.
Daz washing powder was introduced from 1953.
Thomas Hedley & Co was the largest producer of synthetic detergent in Britain by 1954. Success was in part due to a significant investment in press advertising.
A 45 acre site was acquired at Whitley Road, Longbenton in 1954. Research and development was transferred there, and later production. The site was chosen by mapping the homes of the workforce and finding the location that would be most convenient for their daily commute.
Thomas Hedley & Co sold $48 million worth of detergent a year by 1955. 3,700 people were employed by 1958.
Flash, a household cleaner, was introduced from 1958.
Fairy Liquid was introduced from 1959. It was the market leader in washing-up liquid by 1961.
Thomas Hedley & Co was renamed Procter & Gamble Limited from 1962. The change was intended to assist with export sales, as the Procter & Gamble name had greater recognition overseas.
Fairy Liquid held 37 percent of the British washing-up liquid market by 1968.
Procter & Gamble Ltd was the largest Procter & Gamble subsidiary in 1969. It was the production centre for the British and Scandinavian markets. The principal products were domestic packaged soaps and detergents.
Ariel biological detergent was introduced from 1969. Bold, a low suds biological detergent was introduced from 1972. Head & Shoulders shampoo was launched in 1973. Lenor fabric conditioner was introduced from 1974. Crest toothpaste was introduced from 1975.
Procter & Gamble was the third-largest business in the North East of England as measured by turnover by 1987. Over 1,000 people were employed in the region.
The Procter & Gamble UK head office was relocated from Gosforth, Newcastle to Weybridge, Surrey from 2000.
The Newcastle site concentrates on the manufacture of fragrances for Procter & Gamble as of 2010. The Manchester site produces Pampers, and the West Thurrock site produces soap and detergents.