/ Gillette shaves $8 billion off the books

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Cú Chullain 09 Aug 2019

Whoops!

https://www.washingtontimes.com/news/2019/jul/31/gillettes-toxic-masculinity-ad-haunts-pg-as-shavin/

Gillette’s infamous “toxic masculinity” ad may cost Procter & Gamble more than anyone imagined in January.

The year that Gillette launched its “We Believe” campaign and asked “Is this the best a man can get?” has coincided with P&G’s $8 billion non-cash writedown for the shaving giant.

Chief Financial Officer Jon Moeller attributed much of the losses on “new competitors” offering “prices below the category average,” Reuters reported.

Observers such as Red State’s Brandon Morse responded by essentially likening the public stance to a lie by omission — the “toxic masculinity” ad punctuated news cycles for weeks and was repeatedly mocked on social media.

“Perhaps P&G isn’t willing to come forward yet with the fact that they made a monumental error in assuming men would take the ‘toxic masculinity’ commercial well, but they should soon,” Mr. Morse wrote Wednesday for the conservative website. “The brand is damaged enough to lose billions, and men aren’t coming back, especially with cheaper alternatives embracing men for who they are and not assuming the worst about them.”

2
mullermn 09 Aug 2019
In reply to Cú Chullain:

Ha. Exactly what I said would happen at the time. 

I wasn’t mortally offended by the campaign or anything, but it made the think ‘I’ve used Mach 3 for literally my whole adult life, maybe their competitors (who aren’t spending my money on sweeping negative ad campaigns aimed at my demographic) are just as good’, and it turns out they are. 

I tried Wilkinson Sword and I find it much smoother than the Mach 3 was, so I’m sticking with it. Nice work Gillette!

4
Coel Hellier 09 Aug 2019
In reply to Cú Chullain:

That's interesting, though it's rather a pity that we don't have a control experiment. 

It's easy to get the impression from certain noisy sectors of the media and social media that woke virtue signalling by a company would be wildly popular.  But I'm not so sure. 

captain paranoia 09 Aug 2019
In reply to Cú Chullain:

£8 billion?

That's the price a couple of packets of blades, isn't it...?

Ramblin dave 09 Aug 2019
In reply to Coel Hellier:

> That's interesting, though it's rather a pity that we don't have a control experiment. 

Or any actual evidence, or a reliable, unbiased source making the connection.

1
Cú Chullain 09 Aug 2019
In reply to Ramblin dave:

While it is acceptable that the changing shaving habits of the under 30s and increased market share from competitors are in some part responsible for the reported loss it is hard to believe there is no strong correlation between a disastrously ill thought out advertising campaign that alienated its core target audience and sales?

5
graeme jackson 09 Aug 2019
In reply to Cú Chullain:

I blame the 20somethings going round trying to look like grizzly Adams. The only people that should have bushy beards are Santa Claus and Captain Fish Finger.

Cú Chullain 09 Aug 2019
In reply to graeme jackson:

No love for Brian Blessed?

cander 09 Aug 2019
In reply to Cú Chullain:

Brands like Harry’s razors and even Lidl own brand razors are so much cheaper, I’m not surprised Gillette are seeing a squeeze on profits - in the end it’s not like you’re buying a brand to make a personal statement, they’re razors and you get a shave, no one knows what brand of razor you used and almost certainly don’t care.

Hardonicus 09 Aug 2019
In reply to Cú Chullain:

Brian Blessed is Santa, where you never told? You need to reflect on your upbringing, maybe have a chat with your Mum about it.

Cú Chullain 09 Aug 2019
In reply to cander:

Bizarrely I think many people are quite loyal to the razor product they use, not so much out of love for brand but for the rather more practical reason that once you have found a razor that does not give you shaving rash or make shit of your face you tend to stick to it. After lots of experimentation with different brands/gels/foam/oils etc in my 20s I settled for Wilkinson and some old school shaving cream and brush as it gave me the best results. Wilkinson would have to commission a stamp on kittens ad campaign for me to change brand. That said, if you are lucky enough that you can use any old brand to shave and get the same results you can be a bit more flippant in your purchases and sometimes an advert being a bit irritating or patronising is just enough to tip people to buy another product when staring at the choice on the supermarket shelf.

1
Thugitty Jugitty 09 Aug 2019
In reply to Cú Chullain:

From the FT: Proctor and Gamble say the write-down is primarily due to currency devaluation, and also that the overall market for razors is down. Shares were up 4% when their results came out.

Cú Chullain 09 Aug 2019
In reply to Thugitty Jugitty:

In fairness P&G are hardly going to say sales are down because we made a shit advert.

3
Eric9Points 09 Aug 2019
In reply to cander:

> Brands like Harry’s razors and even Lidl own brand razors are so much cheaper, I’m not surprised Gillette are seeing a squeeze on profits - in the end it’s not like you’re buying a brand to make a personal statement, they’re razors and you get a shave, no one knows what brand of razor you used and almost certainly don’t care.


I've been involved in the design of similar sorts of insert mouldings (because that's what they are) for many years. My guess would be that the cost of an individual head would be maybe 30 cents with an upfront investment of maybe 2 million US dollars for the tooling.

So yes, Gillette et al have been making a tidy profit for some time.

Mike Stretford 09 Aug 2019
In reply to Cú Chullain: Completely passes me by. Obviously big news to those who require safety razors.

elsewhere 09 Aug 2019
In reply to Cú Chullain:

There would have to be a lot of snowflakes triggered by an ad to cause a $8B writedown.

There probably is enough long term trends and competition though.

  

4
Cú Chullain 09 Aug 2019
In reply to Mike Stretford:

Do you shave with an axe after chopping logs?

Pan Ron 09 Aug 2019
In reply to elsewhere:

I guess if an advert focussed on how black people contribute disproportionately to crime statistics and urged them to behave better, law abiding blacks would be "snowflakes" for choosing to shop elsewhere?

11
duchessofmalfi 09 Aug 2019
In reply to Cú Chullain:

Come on folks it's not the ad that caused the write-down.  It's hipster beards, the youth of today can't be arse to shave and all the money has gone into craft beer and beard oil.

Arms Cliff 09 Aug 2019
In reply to Cú Chullain:

> In fairness P&G are hardly going to say sales are down because we made a shit advert.

But it would be easy to research if their reasons were valid, if one was so inclined.

Post edited at 13:37
elsewhere 09 Aug 2019
In reply to Pan Ron:

Perhaps we need a safe space for those that were offended by Gillette.

3
Tyler 09 Aug 2019
In reply to mullermn:

> I wasn’t mortally offended by the campaign or anything, but it made the think ‘I’ve used Mach 3 for literally my whole adult life, maybe their competitors (who aren’t spending my money on sweeping negative ad campaigns aimed at my demographic) are just as good’?

Why then and not before? Did you feel the ad targeted you?

DancingOnRock 09 Aug 2019
In reply to Cú Chullain:

A non cash write down could include a goodwill write down. You’d have to look at their accounts which are probably available somewhere. £8bn will be a write down to cover several years, not a few months. 

Mike Stretford 09 Aug 2019
In reply to Cú Chullain: Don't be silly, I'm not some luddite. I use the hedge trimmer when my beard gets smelly.

Anyway, I think you've realised why Gillette think's you're a bunch of girly men.

stevieb 09 Aug 2019
In reply to duchessofmalfi:

> Come on folks it's not the ad that caused the write-down.  It's hipster beards, the youth of today can't be arse to shave and all the money has gone into craft beer and beard oil.

This could well be the truth. The number of people who shave daily is much reduced. The US shaving product market is down 10% in 5 years, Gillette’s share of the market is down from 70% to under 50% in the past 10 years, and they’ve had to cut margins to hold on to market share. I’ve not seen any figures which show whether or not this ad has had any impact whatsoever on sales. 

captain paranoia 09 Aug 2019
In reply to Cú Chullain:

I confess that I've never seen this 'toxic masculinity' advert.

I do find most of their adverts pretty barf-inducing. Their current "don't feel pressure" is a bit questionable. And I'm not sure about their obsession with wendyball players, and their sensitive chests when they shave them. Hmm... Body hair removal for men; trying to create a new market.

Post edited at 15:19
In reply to duchessofmalfi:

>  beards, craft beer and beard oil.

F*** yes Duchess. F*** yes.

Bob Hughes 09 Aug 2019
In reply to Cú Chullain:

> In fairness P&G are hardly going to say sales are down because we made a shit advert.

Not so sure about that. "sales are down because we made a shit advert. But don't worry, they'll be up again next quarter after we've made a good advert" sounds like a better investor story than "sales are down because the recent entry of low-cost competitors means we're not likely to see those kinds of profits ever again". 

More broadly, I don't buy the story that this is all because of one ad. Most of the marketing research suggests that ads work by keeping a product in people's minds (mental availability), that boycotts nearly never work and even if they do only for a short period. Witness all the bru-haha over people buring their nike socks because of the ad campaign with Colin Kapaernick....Nike sales were up 30% in the months immediately following the campaign. My guess is all the talk about Gillette's ad did them a favour but it was probably hidden in a general downward trend. 

Bob Hughes 09 Aug 2019
In reply to Cú Chullain:

just done a bit more digging.... the write-down was related to goodwill value established in 2005. So f*ck all to do with their latest ad. Razor sales were up year on year. 

https://www.cnbc.com/2019/07/30/procter-gamble-writes-down-gillette-business-but-remains-confident-in-its-future.html

Post edited at 18:47
rossowen 09 Aug 2019
In reply to Bob Hughes:

Fair enough.  It was a sh1t ad tho. 

3
Donny M 09 Aug 2019
In reply to cander:

Yup I’ve been on Harry’s for a year now. Paid like £7 for a sweet handle and starter pack and now every 6 months a pack of blades and some shaving foam arrives in the post. No plastic to dispose of no trip to the shops and I hardy notice the £14 or whatever it is direct debited from my account. Pretty sure it’s an independent-ish company and I have no interest in putting money in the pockets of P&G and the Like. 

Haven't seen their advert either. 

Gear Lover 10 Aug 2019
In reply to Cú Chullain:

Why is it hard to believe that it’s a coincidence? All I see is a correlation, not a causation. It is well-documented that men are shaving less frequently, and Harry’s/dollar shave club have disrupted the razor industry previously dominated by the likes of Gillette.

Allow me to propose a theory of my own. I’ve had a look at the twitter account of the guy you quoted (Brandon Morse). Trump-supporting conservative who opposes any form of gun control and has refused to criticise trump for any of his recent racist/sexist remarks (I scrolled down several months). Sounds exactly like the kind of man who would feel threatened by the ‘be better’ advertisement and would therefore have an active interest in trashing the ad campaign. Sounds exactly like the kind of man who needs to be better.

Gillette have been incredibly brave to make this social issue the focus of their campaign. I’m a man, and I applaud it. And I agree, men should be better. The ad doesn’t alienate me, offend me, or make me insecure. If I shaved, I would use Gillette.

6
cander 10 Aug 2019
In reply to Donny M:

I’ve grown a beard, use my dads RAF WW2 issue safety razor to keep things tidy - no plastic, my grand daughter sneaks up and rubs her cheek against my beard whilst giggling which is fun and charming. I have a much quicker morning routine and those excellent lads from Kurdistan keep the beard under control - what’s not to like. 

summo 10 Aug 2019
In reply to Cú Chullain:

I can't believe anyone gets drawn in to pay silly prices to trim something that will reappear the next day, regardless of how many super close special swivelling blades they use. 

Old school pack of razor blades every time. Just as close, zero plastic. 

Post edited at 20:14
Thugitty Jugitty 10 Aug 2019
In reply to Donny M:

> Yup I’ve been on Harry’s for a year now. Paid like £7 for a sweet handle and starter pack and now every 6 months a pack of blades and some shaving foam arrives in the post. No plastic to dispose of no trip to the shops and I hardy notice the £14 or whatever it is direct debited from my account. Pretty sure it’s an independent-ish company and I have no interest in putting money in the pockets of P&G and the Like. 

Harry's was bought this year by the owners of Wilkinson's Sword, for £1bn.

Jamie Wakeham 10 Aug 2019
In reply to Donny M:

Just had a look at Harry's - I've noticed it being advertised. Works out at about 50p a blade? And looking at the pictures, they're still in a plastic surround?

I can't recommend a proper double edged razor highly enough. My Merkur handle cost about £20… blades are literally pennies (I buy Voskhod at around £10 for 100) and being double edged you get twice as many shaves from them. The only waste material is the metal of the blade itself - no plastic at all. 

Post edited at 21:39
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Hooo 10 Aug 2019
In reply to Donny M:

I just checked out Harry's and the website says £1.75 a blade!? I've just bought 32 Mach 3 blades for £40, so I'm good for the next 3 years anyway, but next time I buy Harry's will have to be quite a bit cheaper before I'll switch.

Lusk 11 Aug 2019
In reply to Cú Chullain:

Is this something I need to be worried about?

I do a shave in the morning though.


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