Gillette consolidates operations in India
17 February 2000
US shaving products major, Gillette, has carried out a major consolidation of its operations in India by effecting a merger of its subsidiaries, Durable India and Wilkinson Sword, with its flagship company, Indian Shaving Products.
With the board of directors of Indian Shaving Products having approved the merger, the respective boards have decided on a swap ratio that will give two shares of Indian Shaving Products for every 13 shares of Durable India and nine shares of Wilkinson Sword. The merger will be effective 1 January 2000. The restructuring move is aimed at bringing all the Gillette operations in India for various brands, including all shaving products and batteries, under Indian Shaving Products Ltd.
Indian Shaving Products manufactures and markets a range of shaving products and dominates the higher end of the market for disposable and twin blade shaving systems. The company's product portfolio consists of imported disposable shaving systems, shave gels, deodorants and aftershaves and toothbrushes. Safety razor blades, which accounted for 75 per cent of the company's sales five years ago, today account for 31 per cent of total turnover. On the other hand, turnover from the other products has been rising gradually from 18 per cent in 1997 to 44 per cent in 1998. The company has also been marketing an increasing number of products that are directly imported from the US.
Indian Shaving Products has a well-entrenched distribution network with a retail reach of about four lakh outlets. Its shaving products are marketed under two main umbrella brands, 7 'O Clock and Gillette. With over 40 per cent market share in the shaving products business in India, the company's products are positioned in the upper end of the market and command a price premium over that of competitors. Spends on marketing and advertising are heavy, in order to upgrade consumers to use more sophisticated shaving systems.
The company launched the 7 'O Clock range of safety blades in 1986 and shaving systems in 1989. Over the years, the brand has been extended to several other products in the same category such as shaving brush, shaving cream, super platinum razor, PII twin blades, super stainless blades, ready shaver disposable shaving system. In 1998, a new brand extension 7 'O Clock Diamond double-edged blade, was launched. The double-edged blade segment has been witnessing stagnant growth rates with consumers shifting to higher end products.
Indian Shaving Products launched Gillette Presto in 1995 and supported the product with heavy marketing and promotions. Presto has achieved impressive volume expansion during the last three years. In 1997, the company launched the Gillette Sensor Excel state-of-the-art shaving system, which is directly imported. The latest product from the Gillette stable is Gillette Mach 3 shaving systems, positioned at the premium end of the market.