Success Without Profits
After Tsunami, a Failed P&G Product Gets a Second Chance to Prove Itself

By Sarah Ellison and Eric Bellman
Staff Reporters of The Wall Street Journal

December's tsunami in Asia destroyed a lot of things. But it also helped revive a Procter & Gamble product that the company had written off as a flop.

The product, a water-purification powder called Pur, was originally envisioned as a revolutionary way to clean the developing world's drinking water. P&G spent four years and $10 million for research and development before launching Pur in September 2002. Chief Executive A.G. Lafley championed the project, as had his two predecessors.

P&G first sold the powder-filled packets in Guatemala and later expanded sales to countries including Morocco, the Philippines and Pakistan. But the packets of chlorine salt and iron sulfate are tough to mix and, at about 10 cents each, were too expensive for many of the world's poor.

By November 2003, Pur still hadn't caught on as a profitable venture. In virtually every market where it was available, Pur failed to gain broad acceptance. By late last year, P&G abandoned plans to sell the product for profit in developing countries and sharply cut back its water-purification plans.

'A Lot of Baggage'

Greg Allgood, the P&G veteran in charge of marketing Pur to people in the developing world, worried about how he would unload the millions of packets of Pur sitting in the company's factory in Manila. Then, shortly after the Dec. 26 tsunami, his cellphone started ringing with calls from AmeriCares, Unicef and the International Federation of the Red Cross with orders for Pur. Like plenty of multinationals, P&G rushed to offer aid to tsunami victims, shipping 15 million packets of the water purifier to affected countries and pledging 13 million more if needed.

The company added a third shift to its factory and had orders to ship 15 million packets of the product to areas hit by the tsunami. Initially, P&G sold the packets to aid organizations at cost-3µ cents-but later decided to donate them because of the scope of the disaster. "After the product failed commercially, Pur had a lot of baggage," Dr. Allgood says. "The tsunami not only revived the product, it established it within P&G."

Even so, the product faced several hurdles. One problem, P&G concedes, is that consumers need a demonstration in order to understand how to use it. The powder, which kills bacterial diseases such as typhoid and cholera as well as various viruses, must be mixed with a specified amount of water and then has to sit for several minutes. The clean water then must be poured through a cloth to filter out debris. It can't be consumed for another 20 minutes.

When Dr. Allgood arrived in Sri Lanka soon after the tsunami hit, he had to do some basic marketing to make sure people understood how to use the water purifier. The product was unknown in Sri Lanka, and Dr. Allgood, who has a doctorate in toxicology and a master's of science in public health, spent long days driving from village to village giving demonstrations of how Pur works and distributing samples. In his car, he carried bright blue buckets and a trunkful of Pur packets.

On one visit to a refugee camp in Galle, Sri Lanka, he brought his bucket to a well that had been under five feet of water after the initial waves subsided and was contaminated and covered by dirt and debris. After filling the bucket with water, he talked villagers through the process step-by-step, showing them how to pour the powder into the water and mix it for five minutes. The crowd watched as clumps of dirt appeared in the water, and eventually fell to the bottom of the bucket. They made comments as Dr. Allgood poured the water through a cloth into another container, and they waited patiently until the required 20 minutes were up.

Dr. Allgood urged children and adults to drink the treated water. When they hesitated, he chugged the water and challenged them to do the same.

Mohamed Irshad, a Sri Lankan who saw the demonstration, said he wanted to use the packets Dr. Allgood left for him. But since the tsunami washed away many of his belongings, he wasn't sure how he was going to mix it. Although Dr. Allgood had left some buckets at the nearby refugee camp, Mr. Irshad didn't have one. He said if Pur was available at the local store, he might consider buying it to protect his family from germs, if the price was right. "I would pay one or two rupees," he says. "Eight rupees is too much." (Eight rupees is equivalent to about 18 U.S. cents.)

'Dirt Magnet'

P&G's safe-water project began more than six years ago after Hurricane Mitch, which devastated much of Central America in the fall of 1998. A cholera outbreak followed, and P&G donated containers of its bleach. "We heard a lot of criticism," from users who said the water tasted like a swimming pool, Dr. Allgood says. Another problem was that people didn't trust the product because the bleach didn't make the water any clearer, he says.

P&G realized it needed to develop a product that not only purified water but removed sediment and dirt that makes water look unappealing to drink. For Pur, the company used iron sulfate, a coagulant that works like a "dirt magnet" to make dirt fall to the bottom of a container, in addition to chlorine salt in its powder mix. P&G hoped Pur would help expand its existing business in places like Central America and Pakistan. The company invested in Pur-branded buckets and a cloth to drain the water, but the kit flopped. "We sold two million sachets and about four buckets," Dr. Allgood says.

The company sold Pur to relief agencies such as Unicef, which used it in the aftermath of the earthquake in Bam, Iran. Some markets, though, proved too difficult to crack. In Iraq, the International Rescue Committee placed a big order for Pur, but after one of its workers was kidnapped, the organization realized that gathering people for product demonstrations was a bad idea.