Reuters
Schick [owned by ENR: please see below:]Hoping Quattro Cuts Into Gillette
Friday September 19, 3:57 pm ET
By Brad Dorfman
CHICAGO (Reuters) - Schick put its new four-bladed razor, Quattro, on store shelves on Friday, hoping an extra blade can help it cut into Gillette Co.'s (NYSE:G - News) dominance in the worldwide shaving market.
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Gillette, meanwhile, is fighting back with increased advertising, discount coupons and even a lawsuit as it finds itself facing innovation from its distant No. 2 competitor for the first time in years in the $6 billion worldwide razor and blade market.
"They've never really had a premium positioning," Ken Harris, partner at consumer products and retail consulting firm Cannondale Associates, said of Schick. "They've always been the budget version of whatever Gillette would introduce."
Schick-Wilkinson Sword, which was bought this year by Energizer Holdings Inc. (NYSE:ENR - News), is hoping its new parent can help it drive up sales after being somewhat neglected by its previous owner, drugmaker Pfizer Inc. (NYSE:PFE - News)
Energizer sells its batteries in many outlets where Schick sells or wants to sell razors, which could increase distribution, one analyst said.
"I would hope that because you've got a company that already is going into many of these outlets, they get some (more) distribution," said Ann Gillin Lefever, senior analyst at Lehman Brothers.
Lefever estimates Quattro's retail sales could reach $90 million in its first year, with an upside to $130 million. That is about a 6 percent to 9 percent share of the U.S. men's razor and blade market, she said.
Energizer will not say how much it expects Quattro to add to sales.
Gillette has countered with an advertising and coupon campaign for its Mach3 Turbo razor, including a money-back guarantee if it does not offer the "best shave in the world."
Quattro and Mach3 Turbo both are priced at $8.99.
"This is a formidable competitor and it looks like there is renewed interest in the business with the new parent," said Michele Szynal, communications director at Gillette. "We're taking nothing for granted."
Gillette has said competing with Schick's Quattro and Intuition, a women's razor with a lubricating bar, could cut this year's earnings by 2 cents to 4 cents a share and next year's by 5 cents to 7 cents.
Gillette, with about 70 percent of the world shaving market, compared with around 16 percent or so for Schick, is also battling in court.
COURTROOM BATTLE
While the addition of a fourth blade to a razor may be new, the way the blades are stacked in the cartridge is not, Gillette said in a patent infringement lawsuit it filed in U.S. District Court in Boston in August. A hearing in the case is scheduled in November.
Gillette is quick to tell reporters that its Mach3 has more than 50 patents.
Schick says Quattro is about more than just a fourth blade. The razor includes wire guides over the blades, two lubricating strips and other features.
"We actually started working on a triple-bladed system and in our testing we discovered that the blades were still missing some of the hair," said Dave VerNooy, vice president for research, development and engineering at Schick.
Schick will launch television advertising for Quattro on Oct. 1 and has already had some newspaper advertising. It also plans radio advertising and "guerrilla marketing" events to tie the razor into men's interests and hobbies.
It did not elaborate on what events might be targeted.
Much of the marketing plan was already in place when Schick was still owned by Pfizer. But Amy Roman, brand manager for the razor, said being with Energizer now helps.
"We definitely feel that the brand has been given more visibility than it would have," she said.
While most retailers are carrying Quattro and hope that Schick can boost competition in the razor aisle, they are taking a "wait and see" attitude about how well the product will sell, Cannondale's Harris said.
"They are trying to make this be a true innovation and a jump ahead of Gillette. I'm not sure if this is the case," he said.
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