In the annals of consumer-product rivalries, Schick vs. Gillette is one of the longest running – going back nearly 100 years -- and chances are you've had a "close experience" with one of these two brands.
Back in 1900, most men were shaved at the barber shop - and it wasn't a daily affair. That changed when a guy named Gillette came along with a disposable blade.
Mr. Gillette may be amazed to see his namesake’s company latest shaver – on Thursday the company unveiled a brand new product called the Mach-3 Power. A battery inside the 3-blade razor delivers gentle pulses that Gillette says stimulates hair follicles upward, allowing them to be shaved more closely by the razor. It will cost $15 with replacement cartridges going for $11.
Schick has responded to the Mach-3 line with the Quattro, with — not surprisingly — has 4 blades. In ads, Schick claims the Quattro is “unlike any other razor."
Well, not according to Gillette, which is suing, claiming the Quattro violates its Mach 3 patent.
And the Schick-Gillette rivalry isn’t just in razors – battery maker Energizer Holdings bought Schick last march for $930 million. Gillette owns Duracell – the maker of the famous “copper top” line of batteries.
They compete in the $2.5 billion-a-year battery market where Duracell has a 46 percent share to Energizer's 33 percent.
But the prime battle ground is for the $1.7 that American men spend on razors and blades every year. Gillette now has 70 percent of the “shaving systems” market, but it may have lost some "edge" to Energizer's new 4-blade Quattro.
"Clearly, Quattro has gained market share at the expense of Gillette,” said analyst Peter Barry at Bear Stearns. “Virtually no one else is out there. But by and large, it will be the repeat business that will be the final measure of ultimate success, and we don't yet have any reliable data in that regard yet."
Combined, they control virtually all razor sales in America: Gillette's Venus and Mach 3 turbo, followed by the Schick Intuition for women, Gillette's Mach 3, and Schick's Xtreme-3. In the third quarter, Gillette had razor sales of $2.41 billion to energizer's $703 million.
And the battle is most fierce between the more expensive Quattro and Mach 3, which is why Gillette has filed its lawsuits.
"I certainly think it shows on Gillette's part they're taking this threat seriously, said CIBC World Markets analyst Joe Altobello. “ And they're trying to do anything they can in the marketplace and courtroom to stifle the competition from Schick."
Introduced in September, Schick's Quattro has already gained 4.5 percent of the market, while Schick's Intuition for women has gained a 15 percent share since its March launch.
For the first time in 30 years, Schick is giving Gillette some realcompetition, and that's cutting into Gillette's pricing power, which has led Altobello to rate the stock an “under-perform.”
"Gillette is probably facing as much competition in batteries and core blades business as it's seen in a long time, Altobello said. “Which to me translates [the stock] into a lower valuation at some point."
Meanwhile, Bear Stearns analyst Barry says that competition has him cautious on Energizer.
"We don't expect it to outperform its peers or the markets in the near term,” he said. “And obviously we're looking at the fundamental performance of the company over the next few quarters to determine where we go from there."
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