When Energizer Holdings announced plans to split with Edgewell Personal Care two years ago, the idea was to separate a battery business that had been stagnant to declining for years from a more vibrant personal-care business.
Then last month Energizer did something pretty shocking -- delivering 9.5% organic sales growth for the quarter ended Dec. 31 -- traditionally the biggest period for the holiday-dependent business. That was driven, to some extent, by last year's launch of EcoAdvanced alkalines, made in part from recycled batteries, which won a Product of the Year award in the sustainability category last month.
Now, Energizer is following that with Energizer Recharge, the first rechargeable AA and AAA batteries made in part from recycled hybrid electric car batteries. That launch, backed by digital and print, is a swan, or perhaps bunny song for longtime agency TBWA/Chiat/Day, which has turned over the account to new agency Camp & King following a review.
What gives with the surprising growth? More than half of Energizer's big quarter was related to timing as retailers' stocking issues pushed some sales from both the prior and current quarter into last quarter, executives said on the company's earnings call. But that still leaves about 4% growth from innovations like EcoAdvanced and a shift to more premium batteries -- not bad for a business that struggled to show any growth for years.
For that matter, Duracell has also had strong growth at least in the U.S., according to Nielsen data from Deutsche Bank, and the whole category was up 9.3% in the four weeks ended Jan. 23, vs. 1.9% for the latest 12 weeks and 0.9% for the latest 52 weeks.
"Yes the category is better than we thought five years ago, really driven by three things -- devices, disasters and demographics," said Michelle Atkinson, chief consumer officer of Energizer North America. "One of the things we're seeing is, as devices change, people are willing to buy longer-lasting batteries and really trading up."
For example, Google's Nest smoke detector takes and specifically calls for six of Energizer's high-end lithium batteries. Energizer and other conventional battery players for years were losing out to lithium-ion batteries made by other companies.
Now, the internet of things, smart home and "smart health" trends are creating demand for batteries Energizer makes, Ms. Atkinson said. "And in terms of demographics, older consumers are willing to engage in the category and spend a little more."
Innovation is playing a role too, not only EcoAdvanced, but also a longer-lasting Energizer Max the brand began selling late last year.
EcoAdvanced only gets 4% of its material from recycled batteries, and the same is true of Recharge. Energizer would use more if it could get it, but battery recycling isn't that well developed yet, Ms. Atkinson said.
"The significance really was that it never has been done before," she said. "The key is on both we will continue to look to increase the amount of recycled content as it's available, and then make sure we deliver on efficacy."
Either way, the battery business looks a lot less sluggish than it did in 2014, when rival Procter & Gamble Co. also agreed to divest Duracell to Berkshire Hathaway in a deal that closed yesterday. Did Warren Buffett get a better deal than it looked like 15 months ago? Maybe, but he's also got a re-energized bunny to deal with.
Camp & King's first work is coming in October, Ms. Atkinson said. "We're working on all the new things you're going to see in a big way, with the bunny being bigger and bunnier," she said.