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Would P&G sell TAOS?

sarimento1

Contributor
P&G announces house cleaning intentions recently.
Who thinks it might include The Art of Shaving?
And if so, who should pick it up?
 

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Sell. AoS revenues have to be a meaningless drop in a very large bucket for a company like P&G. Aos serves a niche market with limited size and growth potential. Potential buyer? Who knows. Another, smaller consumer products company?
 
If nothing else, it would be wishful thinking. Be it reality or perception, many old customers think the products have gone downhill since P&G's 2009 acquisition. The founding entrepreneurs, Myriam Zaoui and Eric Malka, opened in Manhattan in 1996. The financial terms of sale to P&G were never officially disclosed but were estimated by industry sources at $60 million. The original partners remained involved in the company, at least as of the time of the sale.
http://www.theartofshaving.com/article-brandstory/article-brandstory,default,pg.html
http://www.reuters.com/article/2009/06/03/procter-idUSN0311519720090603#
P&G was not previously involved in retailing and it left management of the division largely to the Miami-based team. P & G's annual report does not break down its $83 billion annual revenue down to the division level, but it is likely that AoS represents a drop in the bucket. Still, if AoS revenues have been recovering and growing, and if it creates no headaches for P & G Corporate, there would be no reason to sell. If they did, I could see something like Limited Brands, with all its retail experience, as a typical good candidate for a buyer.
 
I don't see AoS being sold off. They are located in premium shopping outlets in 39 of the 50 states with New York (two new stores coming soon to Rock Center and World Trade Center), California (two new stores coming soon to Cerritos and Corte Madera), Florida, and Texas having the largest market penetration. there is even a store opening in Honolulu, Hawaii. That's five new stores all going in prime shopping real estate where tourism dollars rule.
 
My bet is they'll be sold within a year. If eShave buys 'em it would be a case of shaving Schadenfreude :001_cool:
 
Sell. (Disclaimer: former P&G'er who still absolutely loves the company)

AOS was likely the pet project of an exec who picked up wet shaving through AOS and convinced the Board that it would give P&G some high-end cachet. But in the end, P&G is a commodity company and not a retailer, and the exec who's pet project this was has moved on to other things. So folks will lose interest, and the original rationale for buying the company (enhanced company status) will slowly dissolve with the push to increase volume and profits (I don't say that as a bad thing).

As an aside, P&G has been credited by many with causing the decline of coffee consumption in the US after its acquisition of Folger's. Before, coffee was a luxury moment, kind of like standing at the sink with a scuttle full of hot lather, but P&G began selling coffee like laundry detergent and the cachet was lost. Then it became all about price. Coffee consumption peaked around 1963, then began a decline that was only reversed decades later as others re-injected the luxury component (i.e., Starbucks).

See any parallels?
 
It makes sense for them to sell it, mostly because P&G is not a retail company. Looks to me like AoS is the only retail chain they own.
 
Okay not on topic but have to get this out of my system....
Every time I see the title I see:
Would P&G sell TACOS
I'm going to go eat lunch now
 
AOS was a strategic investment. It's not even about revenue (though I have no idea how well the division is doing) but about controlling the high end of the shaving market, and more importantly, developing the way forward for the entire Gillette division.

They face a real challenge: they need to show earnings growth to Wall Street, but the old approach (adding more and more blades to cartridge razors) is at the point of diminishing returns. They can add 20-plus blades to a razor cartridge, but at some point the consumer's going to get wise. Right now most of their growth is coming from emerging markets like India, but they need to find a way to grow earnings in mature markets as well.

So the question is: how, going forward, are they going to get the consumer to pay even more than $44 for 12 cartridges? The only way is to somehow find a way to create a "high-end" brand mystique around shaving. Trust me, when they see people paying $100 for MdC their mouths are watering. They need to find a way to harness that energy. In that sense AOS represents a very cheap form of R&D for them. It also represents a way to make sure that when they let that genie out of the bottle, they're the ones in control.
 
That makes sense. Holding onto the chain as research. I can see it now in the future...
Sandal Wood, Citrus, Lime, custom scents and added tallow IN CANS! A DE designed with micro finned safety bar, and three ultra thin spring loaded blades all on a 'swivel ball' handle design!
 
AOS was a strategic investment. It's not even about revenue (though I have no idea how well the division is doing) but about controlling the high end of the shaving market, and more importantly, developing the way forward for the entire Gillette division.

They face a real challenge: they need to show earnings growth to Wall Street, but the old approach (adding more and more blades to cartridge razors) is at the point of diminishing returns. They can add 20-plus blades to a razor cartridge, but at some point the consumer's going to get wise. Right now most of their growth is coming from emerging markets like India, but they need to find a way to grow earnings in mature markets as well.

So the question is: how, going forward, are they going to get the consumer to pay even more than $44 for 12 cartridges? The only way is to somehow find a way to create a "high-end" brand mystique around shaving. Trust me, when they see people paying $100 for MdC their mouths are watering. They need to find a way to harness that energy. In that sense AOS represents a very cheap form of R&D for them. It also represents a way to make sure that when they let that genie out of the bottle, they're the ones in control.
Yes, I agree. At some point they're going to have to start promoting luxury razors and luxury soaps for revenue. I also don't see what innovation they can make that will be a real move beyond their Fusion. The battery gimmick already seems like desperation. I suppose they could start selling super high end $500 razors and super high end blades designed to last for a year but costing $100 while counting on people to lose, mangle, or just abuse their blades in the meantime so they'd have to buy more.
 
My bet is they'll be sold within a year. If eShave buys 'em it would be a case of shaving Schadenfreude :001_cool:
Isn't the owner/founder of eShave the sister to the one of the owners/founders of TOAS. Would that not be conflict of interest?
 
Makes no sense to sell. With TAOS they control the high and the low end of mass consumer shaving.
+1 sort of. The last figure I saw was that Gillette, and I believe I read that before P&G bought them, controlled over 90% of the world shaving market. I think Gilette was an intelligent acquisition, but AOS must be a pretty small portion of that.
 
Yes, I agree. At some point they're going to have to start promoting luxury razors and luxury soaps for revenue. I also don't see what innovation they can make that will be a real move beyond their Fusion. The battery gimmick already seems like desperation. I suppose they could start selling super high end $500 razors and super high end blades designed to last for a year but costing $100 while counting on people to lose, mangle, or just abuse their blades in the meantime so they'd have to buy more.

My guess is they'll create a line of products that simply co-opts what the DE shaving world is already doing.

A line of shaving creams with "natural" ingredients and scents, instead of the weird blue gels.

A line of "premium" razors with "premium" cartridges to match.

The razor will have more sophisticated, perhaps retro styling, in contrast to the video game joystick-style handles they've been peddling for a while now. More metal, less plastic. Think of the cartridge razor handles AoS already sells. Better packaging, etc.

But importantly, it won't cost what an AoS razor costs. As has always been their strategy, the razor will seem like a bargain for "quality" -- a high-end looking cartridge razor for $20 or so. Where you will pay more, as usual, is for the cartridges.

It also won't sell through AoS, but through their typical retail channels. Though it may have the AoS branding on it.
 
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