Posts tagged with "Euromonitor"

Edgewell to ‘shave off’ industry disruptor and competitor Harry’s in $1.37B acquisition

May 10, 2019

The dream of many entrepreneurs is to launch a great idea—and then get bought out for millions of dollars. That’s just what happened to Andy Katz-Mayfield and Jeff Raider, who founded New York City-based Harry’s in 2013 because “they were tired of overpaying for overdesigned razors, and of standing around waiting for the person in the drugstore to unlock the cases so they could actually buy them.”

Now, they offer a starter set—a weighted rubberized handle, a five-blade razor cartridge, foaming shave gel, and a travel blade cover—for just $8. Customers can choose to continue buying with a subscription service that will send customized refills every two, three, or five months.

Not only have Katz-Mayfield and Raider disrupted the entire shaving industry—until that time, dominated by just two brands (Gillette and Schick)—but now, they’re joining forces with one of them, The New York Times reports.

Edgewell Personal Care—the company that owns the Schick and Wilkinson razor brands (as well as Hawaiian Tropic)—announced on May 9 that it plans to buy Harry’s for about $1.37 billion in stock and cash. And the founders, Katz-Mayfield and Raider, will stay on to run Edgewell’s operations in the United States.

It is the one of the largest recent examples an established business buying a younger, nimbler competitor born of the Internet and predicated on reaching consumers in new ways, the Times reports. That has included deals like Unilever buying Dollar Shave Club, the other shaving start-up sensation, for $1 billion three years ago; as well as Walmart acquiring the online men’s wear purveyor Bonobos for about $310 million.

In the men’s shaving market, the combined Edgewell and Harry’s will remain a distant second to Procter & Gamble’s Gillette brand, which commanded 47.3% of the American market last year, according to data from Euromonitor. Edgewell’s top brands held about 13.6% of the market, while Harry’s had about 2.6 percent.

But executives from Edgewell and Harry’s said in an interview with The New York Times that they saw a chance to form a big, new consumer products company infused with both global reach and new ways of marketing to customers.

“We’ve had an interesting product portfolio, but we’ve lacked a way to communicate with the consumer,” Rod Little, Edgewell’s chief executive, said.

Talks between the two companies began in earnest shortly after Little was appointed to his post in March, the executives said. The Harry’s management team had considered alternatives, like an initial public offering, but combining with an established brand ultimately made the most sense.

“This got us where we wanted to go more quickly than some alternative route,” Katz-Mayfield said.

Under the terms of the deal, which was approved by both boards on May 8, 79% of Edgewell’s offer—just over $1 billion—would be in cash. The remainder would be in stock, giving Harry’s investors a roughly 11% stake in the combined company.

Katz-Mayfield and Raider will become co-presidents of Edgewell’s American operations, giving them a bigger perch and more brands to oversee and overhaul.  Little will remain chief executive of the combined business.

The deal is expected to close by March 31, 2020.

Research contact: @harry’s

Beer here?

January 21, 2019

What will fans drink at baseball games next summer? Something tells us that fraternity boys are still buying kegs—but overall, Americans are increasingly laying off the booze; especially, the beer.

In response to the growing trend toward nonalcoholic drinks, the world’s biggest brewers and liquor companies are innovating beyond their traditional inventory and rolling out teas, energy drinks, and nonalcoholic spirits, The Wall Street Journal reports.

According to the Journal, new data show that U.S. alcohol volumes dropped 0.8% last year, slightly up from the 0.7% decline in 2017. Beer got hit the hardest, with volumes down 1.5% in 2018, compared with a 1.1% decline in 2017. Growth in wine and spirits slowed, as well, according to data compiled for the news outlet by drinks market analyst IWSR.

The fall in alcohol volumes reflects “a growing trend toward mindful drinking or complete abstinence, particularly among the Millennial cohort,” Brandy Rand, president of IWSR’s U.S. Region told the newspaper. Wine grew by 0.4%, down from 1% the year before; while spirits climbed 1.9%, compared with 2.2% in 2017. IWSR’s figures are based on products shipped.

And speaking of Millennials, could alcohol (and weed) vaping be a factor? While The Wall Street Journal doesn’t cover this game-changer in its report, the vaping industry is now a multi-billion dollar business, with teens and Millennials among the fastest-growing groups of users.  According to recent research by the FDA, over 1.3 million youths are vaping. 2017 saw the largest spike of any substance use in the United States in the past 50 years. E-cigarettes are now at epidemic level of use in the United States.  

In response to the changing marketplace and the growing disinterest in alcoholic drinks, producers are beginning to diversify:  Molson Coors Brewinghas turned to kombucha, Budweiser brewer Anheuser-Busch InBev  sells a spiked coconut water, and Smirnoff maker Diageo wants teetotalers to start mixing cocktails with a pricey, alcohol-free gin alternative, says the Journal.

IWSR forecasts low- and no-alcohol products in the U.S.—still a small slice of the market—to grow 32.1% between 2018 and 2022, triple the category’s growth over the past five years.

Industry executives say drinkers are increasingly concerned about health and that younger generations socialize differently from their parents, drinking less.

“Twenty years ago we didn’t have coffee shops open late, and pubs and bars open for coffee,” Ben Branson, CEO of nonalcoholic distilled spirit maker Seedlip (which is part owned by Diageo) told the news outlet. “People are favoring experiences over ‘let’s go drink on a night out.’”

AB InBev last year created a new global position, head of nonalcoholic beverages, to lead its efforts to diversify. Nonalcoholic drinks—including energy drinks and nonalcoholic beers—already make up more than 10% of the Bud brewer’s volumes. In 2017, it acquired San Francisco-based Hiball, a producer of organic energy drinks.

What’s more, says the Journal, AB InBev recently began selling Budweiser Prohibition brew—a nonalcoholic version of its flagship beer—in Columbus and Detroit. Nonalcoholic beer volumes nationwide. are expected to climb 9.3% over the next five years, according to research firm Euromonitor.

The beer company also has stepped up its efforts to woo consumers defecting to wine and cocktails. Its craft-style breweries in Oregon, California and New York have served as incubators for new, boozy versions of coconut water, matcha tea and agua fresca, a Mexican fruit-juice drink. And the brewer plans to later this month launch a spiked seltzer brand, Bon & Viv, which it will advertise alongside its beers at the Super Bowl.

“People are looking for something that tastes good but also allows them to live well,” Chelsea Phillips, head of marketing for AB InBev’s Beyond Beer division in the U.S., said in an interview with the Journal.

Research contact: saabira.chaudhuri@wsj.com

World Health Assembly is aghast when USA objects to ‘mother’s milk’ resolution

July 10, 2018

Most of us think of “mother’s milk” as unsullied and irreproachable. Not so, the Trump administration. A resolution to encourage breast-feeding was expected to be approved quickly and easily by the hundreds of government delegates who gathered this May 21-26 in Geneva, Switzerland, for the annual United Nations-affiliated World Health Assembly. However, the U.S. delegation instead chose to embrace the interests of infant formula manufacturers—upending the deliberations, according to a July 8 report by The New York Times.

Based on decades of research, the proposed resolution stated that mother’s milk is healthiest for children and countries should strive to limit the inaccurate or misleading marketing of breast milk substitutes.

American officials turned the tables on the other delegates by removing language that called on governments to “protect, promote and support breast-feeding” and another passage that called on policymakers to restrict the promotion of food products that many experts say can have deleterious effects on young children.

When that failed, they turned to threats, according to diplomats and government officials who took part in the discussions. Ecuador, which had planned to introduce the measure, was the first to find itself in the cross hairs.

The Americans were blunt, the Times reported: If Ecuador refused to drop the resolution, Washington would unleash punishing trade measures and withdraw crucial military aid. The Ecuadorean government quickly acquiesced.

The showdown over the issue was recounted by more than a dozen participants from several countries, many of whom requested anonymity because they feared retaliation from the United States.

Health advocates scrambled to find another sponsor for the resolution, but at least a dozen countries, most of them poor nations in Africa and Latin America, backed off, citing fears of retaliation, according to conversations the Times had with officials from Uruguay, Mexico, and the United States.

We were astonished, appalled and also saddened,” said Patti Rundall, the Policy director of the British advocacy group Baby Milk Action, who has attended meetings of the assembly, the decision-making body of the World Health Organization, since the late 1980s.

“What happened was tantamount to blackmail, with the U.S. holding the world hostage and trying to overturn nearly 40 years of consensus on the best way to protect infant and young child health,” she said.

In the end, the Americans’ efforts were mostly unsuccessful. It was the Russians who ultimately stepped in to introduce the measure — and the Americans did not threaten them.

Although lobbyists from the baby food industry attended the meetings in Geneva, health advocates said they saw no direct evidence that they played a role in Washington’s strong-arm tactics. The $70 billion industry, which is dominated by a handful of American and European companies, has seen sales flatten in wealthy countries in recent years, as more women embrace breast-feeding. Overall, global sales are expected to rise by 4 percent in 2018, according to Euromonitor, with most of that growth occurring in developing nations.

The intensity of the administration’s opposition to the breast-feeding resolution stunned public health officials and foreign diplomats, who described it as a marked contrast to the Obama administration, which largely supported W.H.O.’s longstanding policy of encouraging breast-feeding.

During the deliberations, some American delegates even suggested the United States might cut its contribution to the W.H.O., several negotiators said. Washington is the single largest contributor to the health organization, providing $845 million, or roughly 15 percent of its budget, last year.

The confrontation was the latest example of the Trump administration siding with corporate interests on numerous public health and environmental issues.

Research contact: @Euromonitor