We compare the consumer goods 'giants' Unilever Plc (LON:UL) and The Procter & Gamble Company (NYSE:PG).
In the 'soap wars' between Unilever (LSE: ULVR) (NYSE: UL.US) and Procter & Gamble (NYSE: PG.US), P&G used to have the upper hand. Remember the 'Persil Power' fiasco of the 1990s? At the time, P&G was seen as the more agile and ruthless competitor compared to its stodgy British rival.
How things have changed. In recent years, Unilever has reinvented itself from a bloated multinational to a lean, mean organisation. It has been a remarkable comeback for the company. The maker of brands such as Flora, Dove and Walls has repositioned itself from the developed world markets that represent its past to the growth markets that very much represent its future.
The flames of creative destruction
But with this change has come pain -- a lot of pain. Over the decade since the turn of the millennium, Unilever's workforce fell by almost half. Sadly, over 100,000 people lost their jobs around the world.
Out of these flames of creative destruction has come a company that has realigned itself to the future. Whole layers of management, as well as obsolete brands, were removed. Most of Unilever's employees are now based in Asia, Africa and the Middle-East. Many of the old internal conflicts of interest, as well as the unwieldy decentralised structure, are now gone.
The result is a company that has been storming ahead. Profits, and thus the share price, are now forging ahead in leaps and bounds. Since the depths of the credit crunch, Unilever's share price has doubled.
Slowing growth
Now compare this with Procter & Gamble. P&G is a mighty organisation that sells brands such as Pantene, Gillette and Ariel. It also has been hugely successful, and is one of the world's most admired companies. The company's share price has also been storming ahead.
But with the success has come the pressure to always produce. Although both Procters and Unilever are on price-to-earnings ratios of about 19 to 20, P&G is currently not matching the growth of its Anglo-Dutch rival -- in fact, earnings per share have recently been falling. P&G is still going through the painful process of restructuring and renewal that Unilever has just completed.
Thus I think P&G's prospects for growth are uncertain and, although both companies are solid investments, if it came to a choice between them, I would definitely plump for Unilever.
So I see Unilever as a growth share that is definitely worth adding to your portfolio. Another growth share that the Motley Fool has identified is described in this report, available free and without obligation. If you want to learn more, please read "The Motley Fool's Top Growth Stock For 2013".
> Prabhat does not own shares in any of the companies mentioned in this article. The Motley Fool has recommended shares in Unilever.
