The Axe razor, a new version of Schick's value-priced Hydro 3 model with Axe's trademark black styling and packaging, is available in regular and power versions on preorder on Walmart.com for shipping Feb. 15 -- a tactic common for DVDs and books but relatively rare for packaged goods.
The Axe-Schick alliance pits P&G's highest-margin business against rivals that have given the company a hard time the past decade. While Gillette has a commanding share of more than 80% in the $1.8 billion market for razor blades and more than 62% in the $250 million market for razor handles, Schick has gained share in recent years. And since Unilever launched Axe in the U.S. just over a decade ago, it's been the primary nemesis of P&G's Old Spice and Gillette in men's deodorant, body wash and hair care.
On Energizer's Jan. 31 earnings conference call, Chairman-CEO Ward Klein called Axe razors "a wonderful opportunity" for his company and Unilever, but declined to provide details, which he said will emerge over the next 30 to 60 days. Mr. Klein said Energizer will manage the launch, but it's not clear whether advertising will be handled by Schick's shop, WPP's JWT, New York, or Axe's shop, Publicis Groupe's BBH, New York. A spokeswoman for Energizer didn't return calls and emails for comment, and Unilever declined to comment.
Extending brands from razors to other men's personal-care products hasn't been easy. Despite its razor dominance, Gillette has never reached even No. 2 in deodorant or body wash and washed out of hair care in a brief attempt last decade. Even in the shave-preparation business, Gillette trails Energizer's Edge.
P&G's attempted move the other direction from personal care to razors worked worse in 2001, when it licensed Old Spice for razors to a small competitor, Universal Razor. The products are now available mainly online and at Dollar Tree stores.
Though the Axe razor is launching first in the U.S., Deutsche Bank analyst Bill Schmitz said it probably has more potential elsewhere, because Schick has better market shares outside the U.S., and can tap Unilever's strong distribution network in developing markets. He said Unilever approached Energizer about the deal.
The Hydro 3 platform on which the Axe razor is based has only a 1% share of blades, Mr. Schmitz said. At $2.50 a blade for a four-pack, Axe replacement cartridges are cheaper than blades for legacy Gillette Mach 3 or top-of-the-line Fusion ProGlide cartridges, priced above $3 and $4, respectively.
While Schick has made inroads against Gillette in the U.S. in recent years, Gillette began regaining share in disposable razors last year and paring year-over-year share losses in razor handles and replacement cartridges in the fourth quarter. That owes in part to the first advertising of Mach 3 since 2006. Gillette's share was down 0.4 points to 82.4% of the razor market in the fourth quarter, but that was better than the 1% decline to 80.8% for the year, according to Nielsen data from Deutsche Bank for the 52 weeks ended Dec. 22.
"We have a healthy respect for all competition," said Gillette spokeswoman Kara Buckley. "But millions of men put their face in Gillette's hands for a reason. We understand men's skin better than any other grooming brand."
Gillette is preparing to launch ads focusing on ProGlide's status as top dermatologist-recommended razor, aimed at the more than 60% of men who say they have sensitive skin, she said. Omnicom's BBDO, New York, handles Gillette, but the brand is in a review where Publicis Groupe's Saatchi & Saatchi and WPP's Grey Global Group are also contending.