Gillette vs. Energizer: Razor duel a feint in battery battle?

By Published on .

Energizer Holdings is growing its battery business at Gillette Co.'s expense even as Gillette beats back its rival's assault in the razor category.

The marketers wage war on two fronts. Gillette's flagship razor competes against Energizer's Schick, while Energizer's batteries duke it out with Gillette-owned Duracell.

Some believe the razor battle has distracted Gillette's resources, leaving Energizer to focus on the battery business that accounts for 70% of its sales.

While Gillette has largely reversed share gains by Energizer's Schick in razors, it has watched its Duracell dollar share erode by more than a point year over year. Gillette for three consecutive quarters said it wouldn't allow dollar shares to erode and complained of record price gaps between Duracell and value battery players. But it has yet to launch an aggressive promotional attack to close the gap or reverse the effects.

Charles Cramb, chief financial officer, told analysts last month that Gillette trimmed overall Duracell marketing support this year by making promotions "more efficient," although ad spending is up.

Both marketers maintain events in the two categories are unrelated.

bigger story

A Gillette spokeswoman denied the cost of defending its core razor business was the reason the company hasn't responded more aggressively to competition in batteries. An Energizer spokeswoman denied that attacking Gillette's razor business was motivated by a strategy to divert its rival's resources.

"We bought Schick because we liked the business," she said. "There was no underlying reason."

But analysts, industry watchers and executives familiar with Energizer's strategy aren't so sure. "The bigger story here might be what's happening in batteries," said one executive familiar with Energizer. "Their battery business is pretty solid."

Energizer said its U.S. battery sales at retail were up 4% last quarter, despite a 3% decline in the category. Gillette doesn't break out U.S. results, but contends its U.S. share in all outlets remained steady last quarter. However, its share was down 1.7 percentage points in the four weeks ended July 10, according to figures from VNU's ACNielsen reported by Banc of America Securities, the 13th consecutive four-week period of declines.

Gillette has bloodied its bottom line in years past with damaging promotional wars to defend against price-based competition in batteries. But it can't afford to do that while engaged in a battle over razors.

The executive familiar with Energizer said that William Stiritz, chairman of Energizer and mastermind of its 2003 Schick acquisition, played out a similar diversionary strategy in pet food against Quaker Oats as chief executive of Ralston-Purina in the 1980s. At the time, Ralston attacked Quaker's moist pet-food business to keep its rival from attacking Ralston's dry-food dominance.

In his soon-to-be-released book "Renovate Before You Innovate," marketing consultant Sergio Zyman makes a similar point. "Duracell knows [Stiritz's] record," Mr. Zyman writes, "and I'm sure they're running scared."

Mr. Shore believes Gillette's real goal with Duracell is to keep it from being a drag on an otherwise strong business, and that it will continue to tolerate minor share losses to avoid a costly war.

In this article:
Most Popular