CAGNY Conference

Schick, Gillette Sharpen Blades for Latest Razor War

High-Margin Category Braces for Price Battles as P&G, Energizer Prepare to Boost Ad Spending

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BOCA RATON, Fla. (AdAge.com) -- The men's razor business looks to heat up considerably this year, as Schick joins Gillette in spending heavily on new launches that could have an unpredictable impact on pricing in what's long been one of the priciest and highest-margin sectors of package goods.

At the Consumer Analyst Group of New York conference in Boca Raton, Fla., today, Energizer Holdings announced plans to launch a Schick Hydro system that's simultaneously a product upgrade and a value play.

Hydro will hit stores in April, two months ahead of Procter & Gamble Co.'s upgrade to its top-of-the-line Gillette Fusion brand, ProGlide. Combined, the new systems are likely to get more than $250 million in marketing support, with around $100 million in backing for Hydro and ProGlide getting the bulk of a $230 million outlay by Gillette in support of men's and women's systems, according to a note earlier this week by Deutsche Bank.

Hydro will come with a new lubricating gel dispenser in each cartridge, and blade guards to smooth shaving, which Energizer Chairman-CEO Ward Klein said represented a shift from hair removal to skin care in men's shaving. A five-bladed version also comes with a trimming blade he portrayed as an upgrade to that on Gillette Fusion.

But perhaps the newest wrinkle in Schick's approach -- and one that could create some new forms of price competition in razors -- is launching a new system that's simultaneously an upgrade to its existing four-bladed Quattro and a value play in comparison to its own legacy system and those of Gillette.

Mr. Klein focused on the positive: the trade-up potential for Hydro from existing Schick products. He said a five-bladed version of Hydro will be priced 10% to 20% above Quattro. But a three-bladed version of the new system will be priced 10% to 20% below Quattro.

As a result, both versions of Hydro will be priced below comparable versions of Gillette's five-bladed Fusion and three-bladed Mach 3. That move will come as P&G looks to trade its consumers up further with a ProGlide system priced 10% to 15% above existing Fusion products.

Citibank analyst Wendy Nicholson noted in a question that it's the first time Gillette and Schick appear to have gone head to head with new system launches, though Mr. Klein said the launch of Quattro in 2003 was also close to that of Mach 3 Turbo the same year. *

The biggest question, however, remains how many consumers will be willing to trade up amid a recession in a category where there are some signs men have begun to trade down, said Bill Pecoriello, analyst with Consumer Edge Research.

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UPDATE: After this story was first published, a Gillette spokesman noted later that Mach 3 Turbo actually launched in 2001, nearly two years ahead of Quattro, though Mach 3 Turbo Champion -- which was a smaller launch that essentially represented a different-colored handle -- did launch the same year as Quattro in 2003.

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